F.! COUDERT BROTHERS LLP 3 NORTH 5 - apscservices.info · coudert brothers llp atorneys at law 1627...

COUDERT BROTHERS LLP ATORNEYS AT LAW

1627 I STREET, N.W. WASHINGTON, D.C. 2 0 0 0 6 - 4 0 0 7 E L : (202) 7 7 5 - 5 1 0 0 FAX: (202) 775-1 168 WWW. COUDEKT.COM

BY FEDERAL EXPRESS

December 4,2003

Secretary of the Commission Arkansas Public Service Commission 1000 Center Street PO Box 400 Little Rock, Arkansas 72201

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NORTH AMERICA

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EUROPE ANTWERP, BERLIN. BRUSSELS, FRANKFURT. GFENT, LqCfi<DON, MILAN, MOSCOW, MUNICH, PARIS,~RO)L~ , ST PETERSBURG. STOCKHOLM 9

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ASSOCIATED OFFICES BUDAPEST, MEXICO CilY, PRAGUE, SHANGHAI

Re: France Telecom Corporate Solutions L.L.C.; Application for Certificate of Public Convenience and Necessity to operate as a Reseller of Local Exchange and Interexchange Telecommunication Services in Arkansas

Dear Sir or Madam:

On behalf of France Telecom Corporate Solutions L.L.C., enclosed for filing please find an original plus fourteen (14) copies of its Application for Certificate of Public Convenience and Necessity to operate as a Reseller of Local Exchange and Interexchange Telecommunication Services in Arkansas.

Please file-stamp and return the extra copy of this filing in the pre-addressed, stamped envelope provided for this purpose. Also enclosed is a check in the amount of $200.00, payable to the Arkansas Public Service Commission to cover the requisite filing fee.

Kindly direct any questions concerning this filing to the undersigned.

William K. Coulter Matthew Vitale Counsel for France Telecom Corporate Solutions, L.L.C.

Enclosures

WASHINGTON 373776~6

http://COUDEKT.COM

Case NO. 0 3 c aP2- b- Application of France Telecom Corporate 1 Solutions L.L.C. for Certification as a 1 Non-facilities Based Local Exchange And Interexchange Carrier ) in the State of Arkansas 1

APPLICATION FOR CERTIFICATION

France Telecom Corporate Solutions L.L.C. (“FTCS” or “Applicant”), by its undersigned

counsel, hereby requests the Arkansas Public Service Commission (“Commission”) to issue a

Certificate of Public Convenience and Necessity (“CPCN’) to FTCS to operate as a reseller of

local exchange and interexchange telecommunications services within the State of Arkansas.

Pursuant to Rules 7.05 and 7.06 of the Commission’s Rules of Practice and Procedure, FTCS

submits the following information in support hereof:

1. Applicant’s legal name and address:

France Telecom Corporate Solutions L.L.C. 2300 Corporate Park Drive Mailstop SP0606 Herndon, VA 201 71

A full list of the officers and directors of FTCS is attached as Exhibit A.

2. FTCS is a Delaware limited liability company. A copy of its certificate of

formation is attached hereto as Exhibit B. A copy of its Certificate of Authority of Foreign

Corporation is attached as Exhibit C.

3. FTCS is seeking authority to provide local exchange and interexchange services

on a statewide basis.

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4. A description of FTCS’ proposed local exchange and interexchange services is

attached hereto as Exhibit D.

5 . FTCS possesses the necessary financial, managerial and technical capacity to

provide local exchange and interexchange telecommunications services on a resale basis within

the State of Arkansas. In support thereof, see Exhibit E (demonstration of financial capability)

and Exhibit F (demonstration of managerial and technical capability).

6 . Attached as Exhibit G is a copy of FTCS’ tariff and price list for the services to be

offered.

7. None.

In compliance with Rule 7.06, the following additional information is provided:

(a) Please see Item #1 above.

(b) Please see Item #2 above.

(c) Please see Item #4 above.

(d) Please see Item #5 above.

(e) Id.

(f) Please see Item #6 above.

(8) FTCS is a reseller of telecommunications services. It does not own, lease or

control any telecommunications facilities used to provide telecommunications

services in the State of Arkansas. FTCS will use the telecommunications

2 WASHINGTON 369934~1

facilities of its underlying facilities-based carriers in order to provide

telecommunications services to its customers located in Arkansas.

(h) None.

Correspondence and communications regarding this application should be addressed to

Applicant’s counsel:

William K. Coulter Matthew Wale Coudert Brothers LLP 1627 I Street, N.W., lZth Floor Washington, D.C. 20006 Tel. (202) 775-5100

Wherefore, by the foregoing application, FTCS requests that the Commission grant a

CPCN authorizing FTCS to resell local exchange and interexchange telecommunications

services throughout the State of Arkansas.

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All of the information contained herein is true, correct and complete to the best of my

knowledge, information and belief.

Respectfully submitted,

William K. Coulter Matthew Wale Coudert Brothers LLP 1627 I Street, N.W., 12th Floor Washington, D.C. 20006 Tel: (202) 775-5 100 Fax: (202) 775-1 168

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AFFIDAVIT

Jean-Sebastien Falisse, Affiant, being duly swordaffirmed according to law, deposes and says that:

He is the Treasurer of France Telecom Corporate Solutions L.L.C.;

That he is authorized to and does make this affidavit for said Applicant;

'That the facts above set forth are true and correct to the best of his knowledge, information, and belief and that he expects said Applicant to be able to prove the same at any hearing hereof.

n Falisse, Treasurer Corporate Solutions L.L.C.

Sworn and subscribed before me this a rv: 'day of NOV&T)&X ,2003

My commission expires: , U O V ~ { a y SEAL

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EXHIBIT A

List of all Officers, Directors, General Partners, Trustees and Members of Applicant

Jean-Sebastien Falisse Treasurer France Telecom Corporate Solutions L.L.C. 2300 Corporate Park Drive Mailstop SP0606 Herndon, VA 20 17 1

Jean Nivoix General Manager France Telecom Europarnasse, 8-1 0 Boulevard de Vaugirard 75903 Paris Cedex 15 France

Bernard Perrillon Manager France Telecom Europarnasse, 8- 10 Boulevard de Vaugirard 75903 Paris Cedex 15 France

Marc Dandelot Manager France Telecom Inc. 1270 Avenue of the Americas New York, NY 10020

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EXHIBIT B

D&me PAGE 1

The First State

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF

DELAWARE, DO HEREBY CERTIFY "FRANCE TELECOM CORPORATE SOLUTIONS

L.L.C." IS DULY FORMED UNDER THE L A W S OF THE STATE OF DELAWARE

AND IS IN GOOD STANDING AND HAS A LEGAL EXISTENCE SO FAR AS THE

RECORDS OF THIS OFFICE SHOW, AS OF THE SEVENTEENTH DAY OF

OCTOBER, A.D. 2002.

AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL TAXES HAVE

BEEN PAID TO DATE.

Harriet Smith Windsor, Secretary of State

3461073 8300 AUTHENTICATION: 2040119

0206423 03 DATE: 10-17-02

07,'23/2002 17:12 F a 202 822 2099 FRANCE TELECOI @I 0 0 3

EXHIBIT C

Arkansas Secretary of State Charlie Daniels State Capitol Building + Little Rock, Arkansas 72201-1094 + 501.682.3409

CERTIFICATE OF GOOD STANDING

1, Charlie Daniels, Secretary of State of the State of Arkansas, and as such, keeper of the records of domestic and foreign corporations, do hereby certify that the records of this office show

FRANCE TELECOM CORPORATE SOLUTIONS L.L.C.

lbrmed under the laws of the state of Delaware as FRANCE TELECOM CORPORATE SOLUTIONS L.L.C., and authorized to transact business in the State of Arkansas as a Foreign Limited Liability Company, was granted a Application for Registration of Limited Liability Company by this office September 11, 2003.

Our records reflect that said entity, having complied with all statutory requirements in the State of Arkansas, is qualified to transact business in this State.

In Testimony Whereof, I have hereunto set my hand and affixed my official Seal. Done at my office in the City of Little Rock, this 16th day of October 2003.

Charlie Daniels Secretary of State

By: t

EXHIBIT D

DESCRIPTION OF APPLICANT’S PROPOSED INTRAEXCHANGE SERVICE OFFERINGS

The Applicant plans to offer all forms of intraexchange telecommunications services on a resale basis within the state. Initially, Applicant will provide Local Exchange Service, Virtual Private Network Service, Local Dedicated Service, Integrated Services Digital Network Primary Rate Interface (ISDN-PRI).

DESCRIPTION OF APPLICANT’S PROPOSED INTEREXCHANGE SERVICE OFFERINGS

The Applicant plans to offer all forms of interexchange telecommunications services on a resale basis within the state. Initially, Applicant will provide Switched Interexchange Service, Dedicated Interexchange Service, Virtual Private Network Service, Frame Relay Service, Carrier 800 Service, Private Line Service and Travel Calling Card Service.

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EXHIBIT E

France Telecom Corporate Solutions L.L.C. Demonstration of Financial Capability

As a newly-formed company, Applicant does not have any audited financial statements. Applicant is majority owned and controlled by France TClCcom S.A. (“France Telecom”), one of the largest communications companies in the world. Applicant’s financial information will be fully consolidated in the financial statements of its parent company.’ Exerpts of France Telecom’s financial filings with the Securities and Exchange Commission are attached, including a Management Report (for the six months ended June 30, 2002 and 2003), and consolidated audited financial statements for the last three years.

France Telecom is a leading integrated communications company which is publicly- traded on both the Paris Stock Exchange and the New York Stock Exchange.

The attached financial documents demonstrate that France Telecom Corporate Solutions L.L.C. clearly possesses the requisite financial capability to provide intrastate telecommunications services in this State.

See Consolidated Financial Statements - France Telecom, 2002, 2001 and 2000 at p. F-9 (“companies which are wholly owned or which France Telecom controls, either directly or

1

indirectly, are fully consolidated”).

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SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

September 12,2003

Commission File No. 1-14712

FRANCE TELECOM (Translation of registrant’s name into English)

6, place d’Alleray, 75505 Paris Cedex 15, France

(Address of principal executive offices)

Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F

F0m20-F X F0rm40-F

Indicate by check mark whether the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 10 1 (b)( 1):

Yes No X

Indicate by check mark whether the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule lOl(b)(7):

Yes No X

Indicate by check mark whether the Registrant, by furnishing the information contained in this Form, is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934

Yes No X

(If “Yes” is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b): 82- 1

Enclosure: France Telecom Management Report for the six months ended June 30,2002 and 2003

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MANAGEMENT REPORT

For the six months ended June 30,2002 and 2003

[EXCERPTS ONLY]

August 31,2003

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1. OVERVIEW

1.1. ACTIVITY AND OPERATING RESULTS

1.1.1. Principal Operating Results

The changes in the France Telecom group’s (“France Telecom” or the “Group”) revenues, operating income before depreciation and amortization and amortization of actuarial adjustments in the early retirement plan (“operating income before depreciation and amortization”, formerly known as EBITDA), operating income, and the balance of operating income before depreciation and amortization less CAPEX (investments in tangible and intangible assets excluding licenses) are presented in the following sections, on both a historical and on a comparable basis.

France Telecom’s management uses operating income before depreciation and amortization and operating income before depreciation and amortization less CAPEX to evaluate France Telecom’s and its divisions’ operating performance, on which it bases the performance reviews of the executives who manage its divisions. The measure of operating income before depreciation and amortization less CAPEX is calculated to permit better evaluation of the efforts of operating divisions on the basis of investments in tangible and intangible assets excluding non-recurring investments (acquisition of licenses).

Six months ended June 30,

2003 2002 2002 03/02 03/02

historical on a historical on a comparable comparable (YO change)

basis basis (unaudited) (unaudited) (e millions) (YO change)

Revenues 22,002 22,472 come before depreciation and amortization(’)

4,645 Investments in tangible and intangible assets excluding

UMTWGSM licenses 0 61 61 ns Operating income before depreciation and amortization less

Average number of full-time employees 225,592 253,139 22 (10.9)% (0.7)%

UMTS/GSM licenses 162 3,073 3,221 2.9)%

CAP EX'^) 6,323 3,729 69.6% 73.3%

(1) Operating income before depreciation and amortization and before amortization of actuarial adjustments in the early retirement plan.

(2) Investments in tangible and intangible assets excluding licenses (see Note 4 to the Consolidated Financial Statements).

On a historical basis, France Telecom’s revenues increased to € 22.9 billion during the first six months of 2003, an increase of 1.7% compared to the first six months of the preceding year. The growth in revenues on a historical basis was marked by (i) the negative effect of exchange rates, which amounted to a loss of € 1.1 17 billion between these two periods, and (ii) by the effects of changes in the scope of consolidation, principally due to the sales of TDF on December 13,2002 and Casema on January 28,2003, and the transfer of ownership of the FTM Lebanon network to the Lebanese Government as of August 3 1,2002, partially offset by the consolidation of the Polish operator, TP Group (TP SA and its subsidiaries) as of April 1, 2002.

Operating income before depreciation and amortization grew 23.5% during the first six months of 2003 as compared to 2002, mainly as a result of the consolidation of the TP Group (the Polish operator TP SA and its subsidiaries), the strong growth in operating income before depreciation and amortization of high growth operations (wireless, Internet, worldwide data transmission services to companies) and the stability shown by fixed line services in France.

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Operating income showed growth of almost 46% over the same period. The balance of operating income before depreciation and amortization less CAPEX grew 73.3% as a result of growth in operating income before depreciation and amortization and the significant decrease in investments in tangible and intangible assets excluding licenses (-32.9%), principally due to declines in the “Orange” and “Fixed Line, Distribution, Network, Major Accounts and Operators segments”.

In order to provide a basis of comparison with the results as of June 30,2003, figures on a comparable basis at constant exchange rates are set forth for the first six months of 2002. To this end, the actual results of the six months ended June 30,2002 are retained, while the results for the corresponding period of the previous year have been adjusted to reflect changes in the scope of consolidation and eliminate exchange rate effects by applying the average exchange rate used in the income statement for the first six months of 2003 to the first six months of 2002.

Figures on a comparable basis permit a more meaningful economic comparison, by restating the results as of June 30, 2002 as the France Telecom group was configured as of June 30, 2003. They reflect mainly the events described in the following table and correspond, in part, to variations in the scope of consolidation and significant developments, including, among others:

- full consolidation of TP Group as of April 1,2002,

- full consolidation of eresMas as from November 1,2002,

- sale of TDF on December 13,2002,

- transfer of ownership of FTM Lebanon network to the Lebanese government as from August 31,2002,

- sale of Casema on January 28,2003,

- sale of Wanadoo Belgique on February 6,2003, retroactively to January 1,2003.

In addition, reported results are also affected by variations in exchange rates, principally involving the following currencies:

- the pound sterling,

- the US dollar,

- the Polish zloty,

- the Egyptian pound.

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June 30,2002 on a comparable basis (unaudited) June 30, 2002 historical'"

June 30 2002 Date event Revenues Operating on a comparable occurred income

basis before depreciation

and amortization (€ millions)

Operating Income

22,472

Consolidation Date

January 1,2002 Apr 1,209 eresMas January 1,2002 Nove 34

~

TDF January 1,2002 January 1,2003 (89) f to

Wanadoo Belgique

Other insignificant variations 28 9 8

Ju

Translation adjustments (1,117) (305) (88)

ant exchange rates (June 30,2003)

(1) Impact on the France Telecom Group's 2002 revenues, operating income before depreciation and amortization, and operating income (after inter-segment eliminations) presented on a comparable basis.

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The principal exchange rate effects on information on a comparable basis are as follows:

Translation adjustments impact on comparable basis figures‘”

Revenues Operating income Operating Income before depreciation and amortization

(e millions)

Translation adjustment (1 117)

(1) Impact of the change in exchange rates between the comparable basis figures at historical exchange rates (June 30,2002) and the comparable basis figures at constant exchange rates (June 30, 2003). After inter-segment eliminations.

On this comparable basis, revenues increased 3.9% for the period ended June 30,2003, mainly due to the increases in wireless and Internet activities, especially internationally.

Operating income before depreciation and amortization increased 24.7% and operating income increased 46.1%, highlighting the France Telecom Group’s improved operating profitability. This growth was mainly due to increases in wireless, Internet, and international activities, as well as to savings realized in the main segments, especially fixed line services in France.

Thus, by focusing on growth sectors and continuing management improvements, the France Telecom Group’s operating income before depreciation and amortization margin increased from 30.9% at June 30,2002, on a comparable basis, to 37.1% at June 30, 2003. Operating income before depreciation and amortization less CAPEX rose 69.6%.

1.1.2. Principal Net Income and Debt Figures

Interest expense for the six months ended June 30, 2003 was € 2,052 million, as compared to € 1,754 million for the year-earlier period. In addition, interest expense for the perpetual bonds redeemable for shares (“titres a durde indderminde remboursables en actions’? issued in connection with the MobilCom settlement was € 140 million for the first six months of 2003.

Foreign exchange gains/(loss) net for the first six months of 2003 recorded a loss of € 83 million, as compared to a loss of € 87 million for the first six months of 2002.

Current income from integrated companies was € 2,270 million for the period ended June 30,2003, as compared to € 1,215 million for the period ended June 30,2002.

Other non-operating income/(expense) amounted to a total expense of € 370 million for the six months ended June 30, 2003, compared to an expense of € 9,339 million for the six months ended June 30,2002. This item included gains on sales of € 92 million at June 30, 2003, mainly due to sales of holdings in Sprint PCS, Casema, and Eutelsat and real estate disposals. Non-operating expense for the six month period mainly involved restructuring costs at Orange and Equant, an adjustment of the provision for the Kulczyck put option (€ 256 million), losses on the repurchase of FT S.A. and Orange notes, and expenses in connection with sales of receivables, partially offset by reversals of provisions for Wind and Tesam.

For the period ended June 30,2002, other non-operating income/(expense) reflected mainly exceptional provisions for MobilCom and NTL.

Income taxes for the period ended June 30,2003, amounted to a benefit of € 3,23 1 million, as compared to an expense of € 2,296 million at June 30,2002. The amount of income tax recorded for the first six months of 2003 mainly reflected the benefit of the

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exceptional deferred tax asset resulting from the operational reorganization of Orange of € 2,590 million, as well as the reversal of a provision for the group tax consolidation of FT S.A. of € 1,100 million.

Net income from integrated companies was € 5,056 million for the six months ended June 30, 2003, compared to a loss of € 10,471 million for the six months ended June 30,2002.

During the first six months of 2003 equity in net income from affiliates amounted to a loss of € 11 1 million, compared to a loss of € 163 million for the year-earlier period.

Provisions for goodwill amortizations (excluding exceptional amortization) amounted to an expense of € 850 million at June 30,2003, as compared to an expense of € 1,466 million at June 30,2002, the decrease being due to exceptional provisions for amortization of goodwill taken at December 31,2002.

At December 31,2002, exceptional provisions for amortization of goodwill involved Equant, OCH, and JTC, in the total amount of negative € 5,378 million. At June 30, 2003, following a review of the value of goodwill, exceptional provisions for amortization were recorded mainly for Freeserve, QDQ Media, Mauritius Telecom, and BITCO and amounted to a total expense of € 1,04 1 million.

Net income of the consolidated group was € 3,054 million for the six months ended June 30,2003, compared to a loss of € 12,100 million for the six months ended June 30,2002.

Net income for the first six months of 2003 was € 2,522 million, compared to a loss of € 12,176 million for the first six months of 2002.

At June 30,2003, France Telecom’s net financial debt (gross financial debt less cash and cash equivalents and marketable securities) was € 49,329 million, compared to € 68,019 million at December 31,2002 and € 69,696 million at June 30,2002. The amount of debt reduction therefore amounted to € 18,690 million compared with the level at December 3 1,2002, largely due to the capital increase of € 14,852 million carried out in the first six months of 2003, the € 2,012 million in free cash flow (excluding asset disposals and increase in short-term marketable securities (SICA V de trborerie) relating to the capital increase) generated in the first half, the € 1,199 million earned in sales of shareholdings, and the € 1,338 million due to the positive effect of exchange rate fluctuations on debt in foreign currency.

1.2. EVOLUTION OF THE GROUP

1.2.1. “Ambition FT 2005” plan (summary)

Immediately upon his arrival at the head of France Telecom on October 2, 2002, Thierry Breton commissioned a team of experts to carry out a complete review of France Telecom’s businesses and financial situation (the “State of the Company” mission ( E m s des Lieux). The main conclusions of this study were presented to France Telecom’s board of directors on December 4,2002. Based on the results of this “State of the Company” mission, France Telecom launched the Ambition FT 2005 plan, based on four components:

“TOP”: a program to improve operational performance, which aims to be the motor for France Telecom to generate during the period from 2003 to 2005 more than € 15 billion in net cash provided by operating activities less net cash used in investing activities. Those cash flows will be allocated to debt reduction.

“15+15+15”: a plan to strengthen France Telecom’s financial structure:

more than € 15 billion in net cash provided by operating activities less net cash used in investing activities, generated by the motor of the TOP program as described above and allocated to debt reduction;

€ 15 billion in additional equity, with the participation of the French State in its capacity as shareholder pro rata to its shareholding interest, i.e., approximately € 9 billion;

€ 15 billion from refinancing France Telecom’s debt.

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These three initiatives will be implemented in parallel, with the objective of gaining greater strategic and financial flexibility and achieving a ratio of net financial debt to operating income before depreciation an amortization of between 1.5 and 2 by the end of 2005.

A strategy focused on customer satisfaction and integrated operational management of a portfolio of assets comprising businesses that are leaders in their principal markets, with strong brands such as France Telecom, Orange, Wanadoo and Equant. France Telecom will consider divesting itself of assets with weak strategic or financial positions, or those for which majority control is impossible. It will aim to develop strategic partnerships in areas that are not part of its core business and where it cannot attain critical size on its own.

A significantly restructured management team with a simplified organization, clear distinctions between the operational divisions and the central functions with responsibility for the whole of France Telecom, and greater responsibility assigned to managers.

1.2.2. Results of the “TOP” Operational Improvements Program for the First Two Quarters of 2003

The following table shows the savings realized in operating expenses and investments in tangible and intangible assets through implementation of the TOP program, by quarter and by half-year, between 2002 on a comparable basis and 2003.

Variations 2003/2002 on a comparable basis (unaudited)

First quarter Second quarter (€ millions)

First half

CAPEX gains‘]’ OPEX gains(2)

333 487

578 345

91 1 832

(1) CAPEX: Investments in tangible and intangible assets, excluding GSM and UMTS licenses. (2) OPEX: Operating charges before depreciation and amortization of assets and before amortization of actuarial adjustments in the

early retirement plan.

TOP projects crossed from the launch stage to the roll-out stage. Following immediate gains recorded in the first quarter of 2003, the gradual restructuring of principal procedures delivered its first results and is being integrated at all levels of the organization to improve operating performance in a continuing manner.

The results achieved from the TOP program during the first two quarters of 2003 exceeded targets. These results should permit an acceleration in debt reduction for the France Telecom Group, while reinforcing its growth.

Over the period 2003-2005, France Telecom’s goal is to generate € 15 billion of free cash f l~w(~’due to TOP. The objective for 2003 is to generate more than € 4 bi l l i~n(~)in free cash flow (excluding asset disposals).

(3) Free cash flow: net cash generated by operating activities, less net cash used in investing activities. (4) This amount does not take into account investment of cash received from the capital increase in short-term marketable securities

(SICAV de tresorerie).

The improvement in operating income before depreciation and amortization less CAPEX was also demonstrated in the first half, reaching € 6.3 billion for the first six months of 2003, an increase of 69.6% on a comparable basis compared to the first six months of 2002 (73.3% on a historical basis).

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First Quarter 2003:

The 100 TOP projects launched in January 2003 have created the dynamic anticipated since the beginning of the first quarter of 2003. France Telecom’s long-term goals for improving its operational performances are reflected throughout the group and are delivering the anticipated revenues.

France Telecom recorded € 3.1 billion in operating income before depreciation and amortization less CAPEX in the first quarter of 2003 compared to € 1.9 billion in the first quarter of 2002, on a comparable basis. This improvement of € 1.2 billion was generated by an increase in revenues of approximately € 350 million, OPEX gains of approximately € 500 million and CAPEX gains of approximately € 350 million.

The improvements recorded since the beginning of the first quarter of 2003 were due, in part, to short-term gains (Quick Wins) that surpassed expectations and were mainly made in purchasing, overhead costs and communications and marketing expenses.

Projects that aim to improve medium- and long-term operational performances were successfully launched. Their impact is less noticeable in the short term, but should gradually become more perceptible throughout the year and until 2005.

In the medium term, the impact of these projects should be realized:

- in the area of investments (CAPEX) mainly due to an improvement of synergies and a better pooling of resources among France Telecom’s divisions; and

- in the area of OPEX, as a result of an internalization of certain activities and an improvement in certain operational processes.

These permanent sources for improving operational performance will progressively help France Telecom realize gains on a short-term basis.

A selective reduction of investments in tangible and intangible assets in order to sustain growth: approximately € 350 million in gains

Approximately € 350 million in gains were realized in the area of investments in tangible and intangible assets in the first quarter of 2003.

Contributions by segment to the reduction in investments in tangible and intangible assets broke down as follows: 47% from Fixed line, Distribution, Network, Large Customers and Operators, 32% from Orange, 10% from Wanadoo and 11% from the segments Equant, TP Group and Other International.

The largest gains were derived:

- one-third from Orange, mainly as a result of its withdrawal from Sweden and a better allocation of expenses in Switzerland, Denmark and The Netherlands.

- one-third from “Networks and Operators” due to the completion of the modernization program for switching in France and a decrease in expenses internationally.

The France Telecom Group continues to invest, especially in areas of growth and development. Orange’s investments in tangible and intangible assets in the first quarter of 2003 remained at generally the same level overall as in 2002 in France and the United Kingdom. A 19% increase in investment expenditures in ADSL should allow for a better deployment of networks and a doubling in the number of ADSL lines in France in 2003. TP Group continues to modernize its network in Poland. WIFI was successfully launched and improvements within France Telecom’s divisions are anticipated in order to modernize the distribution and business networks.

The decrease in investments in tangible and intangible assets was due, in large part, to:

- an improvement in process, with, for example, the creation of coordination efforts such as the investment comttee. This committee oversees the consistency of investments and the investment decisions of the France Telecom group. The committee

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enables France Telecom to better define its priorities in accordance with its business plan;

- an improved allocation of spending;

- an improved pooling of resources; and

- a better assessment of market needs.

Gains related to operating expenses: approximately 42 500 million

Approximately € 500 million in gains were realized in operating expenses in the first quarter of 2003, representing a decrease of 6.3% compared to the first quarter of 2002 on a comparable basis.

The gains related to operating expenses were mainly due to short-term improvements (Quick Wins) linked to reductions in consulting, general and administrative expenses, communication and advertising. On a comparable basis, external purchases decreased by € 343 million between the first quarter of 2002 (€ 4,809 million) and the first quarter of 2003 (€ 4,466 million).

On a comparable basis, between the first quarter of 2002 and the first quarter of 2003:

- The “Fixed line, distribution, network, large customers and operator” segment contributed to the reduction in operating expenses by € 249 million through reductions in equipment purchases and the internalization of certain activities, such as Transpac.

- Orange’s operating expenses decreased by € 107 million. The restructuring of Orange in Switzerland, Denmark and The Netherlands as well as the withdrawal from Sweden also contributed to the reduction in operating expenses in this segment for the first quarter of 2003. The operational restructuring of Orange Corporate generated a savings of € 15 million at the end of March 2003. Reductions were also realized as a result of an improved coordination of corporate communication campaigns and a decrease in sponsoring expenses.

- At Wanadoo, the optimization of customer services and an improvement in the sales and distribution strategy in France and the United Kingdom led to a slight increase in operating expenses of € 15 million, despite a 35.4% growth in activity on a comparable basis.

- Equant contributed to the decrease in operating expenses by implementing a cost reduction plan, allowing it to significantly reduce direct costs (access, circuits and maintenance) and to record an important reduction in commercial and administrative costs. TP Group successfully pursued its continued restructuring, particularly relating to distribution and customer service. OPEX decreased € 133 million overall for the Equant, TP Group and Other International segments.

As a result of the sourcing project, € 369 million out of the goal of € 720 million in cash savings to be realized in 2003 has already been contracted and is expected to produce the anticipated results. The first wave of this project was successfully introduced. A purchasing volume of approximately € 5.4 billion is involved in this first wave of the program for which 18 out of 30 categories had already been launched as of March 3 1,2003.

Second Quarter 2003:

TOP projects have crossed from the launch stage to the roll-out stage.

Progression of operating income before depreciation and amortization less CAPEX: an increase in the first half of approximately 70% on a comparable basis. Operating income before depreciation and amortization less CAPEX amounted to € 3.2 billion compared to € 1.8 billion for the second quarter 2002 on a comparable basis (approximately € 2 billion on a historical basis). This improvement of € 1.4 billion on a comparable basis was due to the increase of approximately € 485 million in revenues, approximately € 578 million for CAPEX gains and approximately € 345 million in OPEX gains. The positive trend in operating income before depreciation and amortization less CAPEX accelerated in the second quarter of 2003. Operating income before depreciation and amortization less CAPEX reached € 3.1 billion in the first quarter of 2003, representing an increase of € 1.2 billion on a comparable basis ( € 1.4 billion on a historical basis) compared to the first quarter 2002.

WASHINGTON 370310~1

Example of a major shared project on OPEX and CAPEX: TOP Sourcing. With the TOP Sourcing program, the France Telecom Group becomes more efficient by improving the quality of its services and activities and by optimizing the prices of its purchases at both CAPEX and OPEX levels.

Under the TOP Sourcing Program, 100% of gains for 2003 have already been contractualized at mid-year.

The TOP Sourcing program is rolled out in three stages:

- January - July 2003: 45% of the France Telecom Group’s total expenses are processed, representing € 8.3 billion, with an expected gain of more than € 700 million for the year 2003;

- July 2003 - January 2004: 25% of expenses, representing € 4.6 billion, will be processed;

- January 2004 - June 2004: 15% of expenses, representing € 2.7 billion, will be processed.

The remaining 15% will be processed at the local level.

The objective of the TOP Sourcing Program is to generate gains of € 4 billion over the period 2003-2005.

Progression of CAPEX: a controlled CAPEX level that should ensure long-term growth.

For the second quarter of 2003, CAPEX represented approximately € 1.1 billion, or 10% of quarterly revenues, compared to approximately € 1.7 billion for the second quarter 2002 on a comparable basis, representing a decrease of approximately 34%. CAPEX gains thus reached approximately € 578 million.

The CAPEX program is carried out through three series of initiatives:

- The first level concentrated on immediate gains, standardizing specifications for purchases and eliminating redundancies. 25 IT programs were decided upon and CAPEX with regards to wireless services was optimized.

- The second level focuses on putting in place corporate governance bodies such as investment committees and concentrates on prioritizing investments in programs focused on growth and productivity. These investment committees examine and prioritize the France Telecom Group’s most important projects.

- The third level identifies convergent opportunities concerning infrastructure, services and billing systems. It focuses on pooling investments in information systems and implementing servicing platforms.

In the second quarter of 2003 and on a comparable basis, the most important gains came from Orange (approximately € 350 million) and fixed line telephony in France (approximately € 240 million).

CAPEX expenses in the second quarter of 2003 were mainly focused on growth sectors: approximately 80% of CAPEX during this period were allocated to growth sectors (compared to 20% in investments in maintenance, renewal and operations). CAPEX for the development of ADSL was on the rise compared to the second quarter 2002 in order to fulfill deployment goals (3 million broadband customers by the end of 2003 and a coverage rate of 90% by the end of 2005). As a result, the France Telecom Group’s CAPEX level should ensure long-term growth in growth markets.

Progression of OPEX: the second quarter benefited from process restructuring

OPEX amounted to approximately € 7.1 billion on a comparable basis in the second quarter 2003, representing a decrease of € 345 million compared to the second quarter of 2002, or approximately 62% of revenues compared to approximately 68% in the second quarter of 2002, an improvement of approximately 6 points in one year.

WASHINGTON 370310~1

OPEX gains are mainly drawn from:

- Immediate gains realized due to, for example, reductions in corporate lifestyle, such as streamlining business travel and reduction of expenses related to sponsorship.

- The launch of pilot stages in the operational restructuring such as the streamlining of Orange UK’s international traffic, adopting new operating procedures, allowing, for example, the internalization of certain activities of fixed line telephony in France, and improved cost control, such as the streamlining of Equant’s access costs.

- The deployment of operating procedures, with improved efficiency in expense committees and the complete alignment of the France Telecom Group’s policies and the sharing of best practices. With this perspective, the organization of regional service centers in France has become more efficient. Certain sale teams were regrouped and pooled at the France Telecom Group level and information platforms were pooled as well.

Gains in OPEX realized in the second quarter of 2003 on a comparable basis were mainly derived from external purchases, which experienced the largest decrease in the second quarter of 2003, at € 4.2 billion compared to € 4.7 billion for the second quarter of 2002, representing a decrease of € 424 million. For example, savings in consulting/advisory related expenses amounted to approximately € 80 million for the second quarter of 2003 while communication and advertising gains amounted to € 50 million.

1.2.3. Subsequent events

Capital increase reserved to employees

France Telecom granted to its employees, during June 2003, the possibility to subscribe to a capital increase reserved for employees. On July 28,2003 the Chairman noted, based on subscription results, that 5,596,476 shares to be paid in cash were subscribed to, plus another 1,754,152 of free shares granted to the subscribers, representing a total number ofnew shares of 7,350,628.

Wind

On March 20, 2003, France Telecom signed an agreement with Enel in order to sell its 26.58% stake in Wind to Enel. The operation, which became effective on July 1,2003, depended, among other conditions, upon regulatory authorizations which were obtained on June 16, 2003 (see Note 11 to the Consolidated Financial Statements).

Early redemption of bonds

On June 30,2003, Orange Plc exercised its option to redeem in advance its bonds with a maturity date in August 2008 (see Note 18 to the Consolidated Financial Statements).

On July 22,2003, France Telecom repurchased € 623 million of bonds convertible into Panafon shares (see Note 17 to the Consolidated Financial Statements).

On July 18,2003, Orange plc launched a tender offer to repurchase for cash its notes due in 2006. This offer was completed on August 26, 2003 (see Note 18 to the Consolidated Financial Statements).

TDIRA

On August 25, 2003, France Telecom and TDIRA holders agreed (i) to amend the TDIRA conditions for remuneration in order to become closer to market conditions following better conditions on interest rate spread granted to France Telecom since its capital increase completed on April 15, 2003 and (ii) to postpone the period during which bond holders cannot sell their TDIRA from October 15, 2003 (date initially planned) until June 30,2004 (see Note 24 to the Consolidated Financial Statements).

On August 29,2003, France Telecom launched an auction process with TDIRA holders in order to repurchase part of the TDIRA. The final result of this operation will be known in the beginning of September 2003.

WASHINGTON 370310~1

Freeserve

Freeserve has decided not to renew the distribution contract of low-speed Internet access offers for Dixons Group retail shops, which is due to expire in February 2004. The distribution contract related to high-speed Internet access offers is unchanged and will carry on until February 2005. Over the last few years, Freeserve has experienced a decrease in the number of new clients originating from the Dixons distribution network. At the same time, Freeserve has initiated new partnerships with Orange, Littlewood and MVC and has announced the signature of a new contract with Lloyds Pharmacy Group, representing 1,300 retail points in the United Kingdom. Freeserve is also developing its distribution channels through, among other things, online services, which have represented approximately one third of the total acquisitions of Freeserve in the first quarter of 2003.

TPSA

On August 29,2003, the Polish State announced its intention to sell its 15 % stake in TP SA by the end of 2003. France Telecoq in agreement with its partner in the consortium, reserves the right of exercising its call option through this offer (see note 28.2 to the Consolidated Financial Statements).

WASHINGTON 3;70310vl

SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2003

FRANCE TELECOM (Translation of registrant’s name into English)

6, place d’Alleray, 75505 Paris Cedex 15, France (Address of principal executive offices)

(Indicate b check mark whether the Registrant files or will file annua Y reports under cover of Form 20-F or Form 40-F)

Form 20-F X Form 40-F

(Indicate by check mark whether the Registrant, by furnishing the information contained in this Form, i s also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934)

Yes No X

(If “Yes” is marked, indicate below the fi le number assigned to the Registrant in connection with Rule 12g3-2(b): 82- 1

Enclosure: France Telecom’s 2002 Consolidated Financial Statements

1

FRANCE TELECOM CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in millions of euros. except per share data)

Sales of services and products . . . . . . . . . . . . . . . . . . . Cost of services and products sold (excluding items

shown separately below) ..................... Selling. general and administrative expenses . . . . . . Research and development expenses . . . . . . . . . . . . . Operating result before depreciation and

amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Note

Depreciation and amortization (excluding

Amortization of actuarial adjustments in the early goodwill) . .................................

retirement plan ............................. 18

Operating result .............................

interest expenses. net ......................... 12 Foreign exchange gain (loss). net . . . . . . . . . . . . . . . . Discounting of early retirement plan . . . . . . . . . . . . . 18 Other non-operating income/(expense). net . . . . . . . 25 Income taxes ................................. 26 Employees profit-sharing ....................... Equity in net income of affiliates 7

Income (loss) before goodwill amortization

Goodwill amortization ......................... 4-7 Exceptional goodwill amortization . . . . . . . . . . . . . . . 4-7 Minority interest .............................. 20

. . . . . . . . . . . . . . . .

and minority interest ......................

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Earnings per share (in euros) Earnings per share before goodwill amortization and

minority interest -basic ...................................... -diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Earnings per share ................................ -net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . -fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year ended December 31.

2002 2001 2000

46. 630 43. 026 33. 674

14. 917 12. 320 IO. 807

(1 3. 176) (3. 206) 4. 700 (2. 352) (2. 531) (1. 092) (5. 378) (3. 257)

170 71 4 52

(20. 736) (8. 280) 3. 660

-

(1 2.1 4) (2.91) 4.41 (12.14) (2.91 4.33

(19.11 1 (7.51) 3.44 (19.11) (7.51) 3.38

See Notes to the Consolidated Financial Statements

F-2


CONSOLIDATED BALANCE SHEETS


ASSETS Goodwill. net ............................... Other intangible assets. net . . . . . . . . . . . . . . . . . . . Property. plant and equipment. net . . . . . . . . . . . . Investments accounted for under the equity

method .................................. Non consolidated investments. net . . . . . . . . . . . . Other long-term assets. net . . . . . . . . . . . . . . . . . . . Deferred income taxes. net . . . . . . . . . . . . . . . . . . .

Total long-term assets ......................... Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivable. less allowances (1. 625

a t December 31.2002.1. 475 a t December 31. 2001 and I. 406 a t December 31. 2000) . . . . . . . .

Deferred income taxes. net . . . . . . . . . . . . . . . . . . . Prepaid expenses and other current assets . . . . . . Receivable from divestment of real estate Marketable securities ........................ Cash and cash equivalents ....................

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL ASSETS ................................

. . . . . .

Note

4 5 6

7 8 9 26

9 26 10 6 12 12

At December 31.

2002 2001 2000

27. 675 34. 963 36. 049 18/41 1 18. 189 16. 289 36. 268 31. 728 34. 623

2. 564 8. 912 1. 418 3. 240 2. 501 1. 936 3. 903 5. 369

92. 740 104. 337

696 900

5,474 41 6

4. 397

45 2. 819

.

7. 596 1 . 102 6. 653 2. 689 1 . I38 2. 943

13. 847

106. 587

23. 021

127. 358

10. 506

722 2. 532

10. 218

1 9 3 9 IO.

I. 216

8. 783 1. 609 4. 782 . 216

2. 040 18. 646

129. 585


F-3


CONSOLIDATED BALANCE SHEETS


LIABILITIES AND SHAREHOLDERS’ EQUITY Share capital-€4 par value-Authorized and

issued: 1.190.158. 724 shares effective year end .....................................

Additional paid-in capital ..................... Retained earnings (loss) ......................

Foreign currency transiation adjustment . . . . . . . . Own shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Shareholders’ equity .......................... Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exchangeable or convertible notes . . . . . . . . . . . . . Other long- and medium-term debt. less current

portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other long-term liabilities ....................

Total long-term liabilities ......................

debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

borrow in ps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income (loss) for the year . . . . . . . . . . . . . . . . .

Current portion of long- and medium-term

Bank overdrafts and other short-term

Trade accounts payable ...................... Accrued expenses and other payables . . . . . . . . . . Other current liabilities ...................... Deferred income taxes ....................... Deferred income ............................

Total current liabilities ........................

EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL LIABILITIES AND SHAREHOLDERS

Note

21

20

12

12 18

12

12

18 18 26 11

At December 31.

2002 2001 2000

4. 761 4. 615 24. 750 24. 228 (5. 434) 4. 682 (20. 736) (8. 280) (3. 315) 844 (9. 977) (5. 002) (9. 951 1 21. 087

9. 780 8. I01

8. 110 IO. 750

4. 615 24. 228 2. 748 3. 660

59 (2. 153)

33. 157

2. 036

2. 653

38. 788 43. 793 27. 894 14. 978 8. 663 5. 220

61. 876 63. 206 35. 767

13. 495 1. 596 7. 542

IO. 490 11. 365 25. 165 8. 503 8. 631 7. 618 7. 395 7. 259 7. 729 1. 712 2. 481 8. 113

87 374 512 3. 200 3. 258 1. 946

44. 882 34. 964 58. 625

106. 587 127. 358 129. 585


F-4


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Foreign Additional currency

(Amounts in millions of euros, Number of Share paid-in translation Own except per share data) shares issued capital capital Reserues adjustment shares Total

At January 1,2000 . . . . . 1,024,615,901 4,098 6,629 8,023 153 0 18,903

2000 . . . . . . . . . . . . . . . 3,660 3,660 Net income for the year

Increase in capital (note 21) . . . . . . . . . . . . 129,216,042 517 17,599 18,116

Movements in holdings of own shares (note 21) . . . . . . . . . . . . (2,153) (2,153)

Adjustment on Orange plc acquisition cost (note 3) . . . . . . . . . . . . . (4,335) (4,335)

Appropriation of earnings . . . . . . . . . . . . (1,025) (1,025)

Translation adjust men t . . . . . . . . . . (94) (94)

Other movements . . . . . . 85 85 Balance at

December 31,2000 . . 1,153,831,943 4,615 24,228 6,408 59 (2,153) 33,157

Net loss for the year 2001 . . . . . . . . . . . . . . . (8,280) (8,280)

Movements in holdings of own shares (note 21) . . . . . . . . . . . . (1,271) (2,849) (4,120)

Appropriation of earnings . . . . . . . . . . . . (1,075) (1,075)

Translation adjustment . . . . . . . . . . 785 785

Other movements (Note 7) . . . . . . . . . . . . 620 620

Balance at December 31,2001 . . 1,153,831,943 4,615 24,228 (3,598) 844 (5,002) 21,087

Net loss for the year 2002 . . . . . . . . . . . . . . . (20,736) (20,736)

Movements in capital (note 21) . . . . . . . . . . . . 36,326,781 1 46 522 668

Movements in holdings of own shares (Note 21) . . . . . . . . . . . (4,975) (4,975)

Appropriation of earnings (Note 21) . . . . (1,056) (1,056)

Translation adjustment (Note 21) . . . . . . . . . . . (4,152) (4,152)

Other movements (Note 21) (780) (7) (787)

Balance at

. . . . . . . . . . .

December 31,2002 . . 1,190,158,724 4,761 24,750 (26,170) (3,315) (9,977) (9,951)



CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended December 31,

2002 2001 2000 (Amounts in millions of euros) Note € € €

OPERATING ACTIVITIES

Adjustments to reconcile net income/(loss) to

Depreciation & amortization of property, plant & equipment and intangible assets . . . . . . . . 4-5-6-7 15,639 12,698 6,818

Gain on divestment of real estate . . . . . . . . . . . . 25 (705) Result on divestment of other tangible and

intangible assets ........................ (37) (92) (23) Result on divestment of other assets . . . . . . . . . 25 (960) (2,093) (7,677) Changes in valuation allowances and other

provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 13,119 7,860 4,113 Undistributed earnings of affiliates . . . . . . . . . . 369 841 276 Deferred income taxes ..................... 26 1,586 (2,090) (277) Minority interests ......................... 20 (1 70) (71 4) (52)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Other items (232) (1 9)

Funds generated from operations . . . . . . . . . . . . 8,578 7,406 6,863

Decrease (increase) in inventories . . . . . . . . . . . 193 341 (329) Decrease (increase) in trade accounts

receivable ............................. 1,219 (628) (978) Securitization of receivables . . . . . . . . . . . . . . . . 9 797 91 4 impact of sales of future receivables . . . . . . . . . 18 (82) 690 Decrease (increase) in other current assets . . . . 542 (1,974) (1,372) Impact of sale of carry back receivables . . . . . . . 26 1,111 (1,111) Increase (decrease) in trade accounts

payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (420) (588) 936 Increase (decrease) in accrued expenses and

other payables . . . . . . . . . . . . . . . . . . . . . . . . . . (99) 2,026 1,493

liabilities 3,261 (330) (250)

Net income/(loss) ......................... (20,736) (8,280) 3,660

funds generated from operations

- -

- -

-

Other changes in operating assets and .................................

Net cash provided by operating activities . . . . . 1 1,839 7,076 661 3

F-6

Year ended December 31,

2002 2001 2000

€ € € (Amounts in millions of euros) Note

INVESTING ACTIVITIES Purchase of property, plant, and equipment and intangible

assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from sale of real estate . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from sale of property, plant, and equipment and

intangible assets . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash paid for Orange plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase of own shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Orange SA IPO proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repurchase of Orange SA shares: exercise of €.On put

option . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exercise of the cal l option on NTL preferred shares . . . . . . . . Change in net cash following the full consolidation of TP

Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash paid for investments securities and acquired

businesses, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . Investments in affiliates . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . Sale of TDF sub-group and investment in Tower

Participations . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . Proceeds from sale of investment securities and businesses,

net of cash sold . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . Decrease (increase) in marketable securities and other

long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5-6 6

3 3-21

3

3 8

3 7

3

3-8

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . FINANCING ACTIVITIES

Issuance of long-term debt . . . . . . . . . . . . . . . . . . , . . . . . . . . . Repayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . Increase (decrease) in bank overdrafts and short-term

borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . UMTS vendor financing . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . Minority interest shareholder contributions . . . . , . . . . . . . . . Dividends paid to minority shareholders . . . . . . . , . . . . . . . . . Appropriation of earnings . . . . . . . , . . . . . . . . . . . . . . . . . . . . .

Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . Net increase (decrease) in cash and cash equivalents . . . . . . Effect of changes in exchange rates on cash and cash

equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents a t beginning of period . . . . . . . . .

Cash and cash equivalents at end of period . . . . . . . . . . . . . . SUPPLEMENTARY DISCLOSURES Cash paid during the period for:

12 12

12 18

20 21

- l n t e r e s t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1ncometaxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7,943) (8,553) (14,313) 2,550 - -

296 274 - (21,693)

(5,022) (8,807) - - 6,102 -

366 -

- - 1,290

146 4,524 7,930

21,002

1,847 (21 3)

(1,029

-

4,726

978 -

See notes to Consolidated Financial Statements

F-7

1. DESCRIPTION OF BUSINESS The France Telecom group ("France Telecom") including in particular i t s publicly listed subsidiaries

Orange, Wanadoo, TP Group (Polish telecommunications operator TP SA and i t s subsidiaries) and Equant, is one of the leading telecommunications operators in the world and i s the principal telecommunications operator in France. France Telecom provides consumers, businesses and other telecommunications operators with a wide range of services including fixed line and mobile telecommunications, data transmission, Internet and multimedia, and other value added services.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements of France Telecom are prepared in accordance with French

generally accepted accounting principles under rule 99-02 of the Comite' de la Rdglementation Comptable (CRC).

2.1 First time application of new accounting texts Rule CRC 00-06 on liabilities

This rule, applicable from January I, 2002, covers the definition of liabilities and provides for specific recognition and measurement criteria. France Telecom reviewed i t s provisions a t December 31,2001 and, as anticipated, the first time application of this rule did not have any effect at January I, 2002.

Rule CRC 02-70 on amortization and depreciation of assets

This rule redefines the notions of amortization and depreciation and further addresses when an impairment test of tangible and intangible assets should be performed. This rule i s applicable for accounting periods starting from January I, 2005 and earlier application from January 1,2002 i s allowed. This rule also provides that, from 2003 onwards, assets must be accounted for on a component basis. France Telecom is currently reviewing the practical implications of this procedure.

In accordance with the recommendation of the Commission des Ope'rations de Bourse (COB) of December 27,2002:

France Telecom, in the description of i t s accounting policies, has adopted the new definition of amortization and depreciation and has set out the method of performing impairment tests on tangible and intangible assets,

France Telecom has also set out the method followed for impairment of goodwill.

COB and Commission Bancaire recommendation of November 75, 2002 relating to deconsolidation mechanisms and derecognition of assets and subsequent lanuary IO, 2003 communication from the Compagnie Nationale des Commissaires aux Comptes (CNCC)

Following this recommendation, France Telecom has reviewed outstanding transactions a t December 31,2002. This review has not given rise to any restatements to net income or shareholders' equity. In accordance with the position of the Compagnie Nationale des Commissaires aux Comptes defining the accounting treatment applicable to disposals of future receivables, the disposal of future receivables from the State, which was recorded as a liability in other long-term liabilities a t December 31,2001, has been reclassified in financial debts a t December 31,2002 (see Note 18).

Statement of December 18,2002 from the Comiti d'urgence of the Conseil National de la Comptabilitd (CNC) relating to the treatment of the tax effect of internal disposals and provisions for depreciation of consolidated investments

This statement provides that no deferred tax asset or liability is to be recorded following the elimination in consolidation of the results of internal disposals of investments in consolidated entities or following tax deductible provisions for depreciation and risks on such shares, except to the extent that tax loss carry forwards of the related entities have given rise to net deferred tax assets. The application of this statement has not given rise to any restatements.

F-8

2.2 Presentation of the financial statements The consolidated financial statements are prepared in euros.

Operating income represents the difference between operating revenues and charges. Operating income before depreciation and amortization (previously entitled EBITDA) represents operating income before amortization and depreciation including impairment losses of long lived assets and before amortization of actuarial adjustments in the early retirement plan, (previously entitled “special items, net”).

The costs resulting from the discounting of the French early retirement plan and from the French legal employee profit sharing are presented as a separate line item in the consolidated statement of income after operating income.

“Other non-operating income/(expense), net” relates mainly to gains and losses on the disposal of consolidated subsidiaries and investment securities including dilution results and the change in provisions against investment securities and marketable securities, dividends received, and movements in restructuring provisions. This heading also includes results on disposals where their relative size exceeds ordinary activity (real estate, commercial receivables, etc.).

The goodwill amortization and depreciation and impairment charge relates to the goodwill of fully and proportionally consolidated companies as well as investments accounted for under the equity method.

The balance sheet classifies assets and liabilities based on liquidity or maturity dates, and presents short-term balances (due within one year) separately from long-term balances.

The statement of cash flows excludes from changes in cash bank overdrafts and those changes in marketable securities having maturities in excess of three months at the time of purchase, which are presented as financing and investing activities.

2.3 Principles of consolidation

The main consolidation principles are as follows:

Companies which are wholly owned by France Telecom or which France Telecom controls, either directly or indirectly, are fully consolidated;

Investments in which France Telecom and a limited number of other shareholders exercise joint control are accounted for using the proportionate consolidation method;

Investments over which France Telecom exercises significant influence but does not control (generally a 20% to 50% controlling interest), are accounted for under the equity method;

Material inter-company balances and transactions are eliminated.

Translation offinancial statements of foreign subsidiaries The financial statements of foreign subsidiaries in a non-euro functional currency, except for those

in countries with hyper-inflationary economies, are translated into Euros as follows:

assets and liabilities are translated a t the year-end rate;

items in the statement of income are translated at the average rate for the year;

the translation adjustment resulting from the use of these different rates is included as a separate component of shareholders’ equity.

The local currency financial statements of foreign subsidiaries operating in countries with hyper- inflationary economies are re-measured into their functional currency, prior to converting to euros, using the following method:

0 monetary elements of the balance sheet are translated at the closing rate;

non-monetary elements are converted at the historical rate;

items in the statement of income are translated at the average rate for the year except for depreciation and amortization charges which are translated a t the historical rate;

the translation adjustment resulting from the use of these different rates is recorded in the income statement as an exchange gain or loss.

The financial statements of subsidiaries re-measured as described above are then translated into Euros using the method applied to a l l foreign subsidiaries of France Telecom.

Purchase accounting and goodwill

Upon acquisition of a business, the purchase price is allocated on a fair value basis to the identifiable assets and liabilities of the business acquired. The fair value of identifiable intangible assets such as trademarks, licenses and customer relationship is determined using generally accepted methods such as the income approach, the cost approach, or the market value approach.

The excess of the purchase price over the fair value of the share of identifiable assets and liabilities of the business acquired i s recorded in the consolidated balance sheet under the heading “Goodwill” for fully and proportionally consolidated entities and i s included in the heading “Investments accounted for under the equity method” for entities over which France Telecom has a significant influence.

Goodwill related to foreign companies is recorded as an asset in their functional currency.

Where there is a partial disposal of shares in fully or proportionally consolidated companies, the cost of the assets sold includes the related portion of goodwill disposed of which i s removed from the balance sheet at disposal, be it through a direct sale in exchange for another asset or through a dilution.

The amortization period for goodwill, usually ranging from 5 t o 20 years, is determined after taking into consideration the specific nature of the business acquired and the strategic value of each acquisition.

The recoverable value of goodwill is subject t o review annually and when events or circumstances occur indicating that an impairment may exist. Such events or circumstances include significant adverse changes, other than temporary, in the business environment, or in assumptions or expectations considered at the time of the acquisition.

The degree of analysis with which France Telecom assesses the recoverable value of goodwill relating to i ts principal sub-groups i s as follows:

the recoverable value of Orange is assessed a t the level of the segment resulting from the regrouping of the acquired Mobile activities of Orange plc and those held previously by France Telecom;

the recoverable value of Equant is assessed at the level of i t s sub group in which the previously held activities in Global One have been integrated;

the recoverable value of Wanadoo is assessed a t the level of each of i t s two activities: the Internet activities (present notably in France, England and Spain) and Directory activities (present notably in France and Spain);

the recoverable value of TP Group is assessed a t the level of i t s sub group.

France Telecom estimates that this level of analysis reflects: the business and market characteristics similar in each of the entities under review (technology, trademark, customers, marketing),

0 the sharing by these entities of common resources (took, R&D, management, financing),

F-I O

the strategic premiums accepted by France Telecom to acquire these activities in order to regroup them with those held previously within coherent sub groups benefiting from increased development potential.

For the other consolidated companies, including equity accounted companies, the recoverable value

The need to record impairment i s assessed by comparison of the consolidated carrying value of the

is assessed on an individual basis.

activity with i t s recoverable value. The recoverable value i s the higher of the realizable value and the value in use.

The realizable value is determined as the best estimate of the disposal value net of costs of exiting the activity within a transaction at normal market conditions. This estimate is valued on the basis of available market information taking into account particular circumstances.

Given the short-term volatility of stock market valuations and the strategic nature of i t s investments, France Telecom gives preference to the discounted cash flow method when assessing value in use. These are determined using economic assumptions and forecast operating conditions used by the management of France Telecom, as follows:

the cash flows are those of business plans resulting from a process of strategic planning, over an appropriate timeframe between 5 and IO years,

beyond this timeframe, cash flows are extrapolated by applying a perpetual rate of growth specific to each activity,

the discounting of these flows i s performed using rates appropriate to the nature of these activities.

Where a disposal has been decided, the recoverable value i s determined with reference to the

2.4 Other accounting methods

Transactions in foreign currencies Foreign currency denominated monetary balances, except for those hedged by currency swap

Unrealized gains and losses on foreign currency denominated balances, except for those hedged by

realizable value.

contracts, are translated a t closing exchange rates.

currency swap agreements and for those arising on liabilities effectively hedged by assets in the same currency, are recognized in the statement of income for the period.

Revenue recognition France Telecom’s principal sources of revenue are recognized as follows:

Revenues from telephone subscriptions or Internet access are recognized on a straight-line basis over the invoicing period; Revenues from incoming and outgoing traffic are recognized when the service i s rendered;

Revenues from sales of telecommunications equipment, net of point of sales discounts, and connection charges are recognized upon delivery to the customer or activation of the line, as appropriate;

Revenues from Internet advertising are recognized over the period that services are provided, revenues from advertisements in printed and electronic directories are recognized when directories are published; Barter transactions performed are recorded only when their value can be determined, and in this case are recorded a t the fair value of the goods or services provided or received, whichever is more readily determinable in the circumstances:

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Revenues from the sale of transmission capacity in terrestrial and submarine cables (indefeasible rights of use-IRU) are recorded in the income statement on a straight-line basis over the length of the contract.

Customer acquisition costs and loyalty costs Customer acquisition costs and loyalty costs relating to mobile and Internet customers are expensed

as incurred. These costs consist principally of commissions and rebates paid to distributors.

Advertising and related costs Advertising, promotion, sponsoring and brand marketing costs are expensed as incurred. Advertising

costs amounted to€1,232 million in 2002 (€1,124 million in 2001).

Research and development

Research and development costs are expensed as incurred.

Web site development costs Costs relating to the development of web sites are capitalized or expensed depending on the phase

of development of sites: costs relating to the planning and operating stages are expensed, costs related to development and creation of the design are capitalized.

Earnings per share

Two types of earnings per share are shown: basic earnings per share and diluted earnings per share. The number of shares used for the calculation of diluted earnings per share takes into account the conversion into ordinary shares of existing potentially dilutive instruments. Diluted earnings are calculated as the net result adjusted for the financial charges of dilutive instruments, net of their effect on tax and employee profit sharing. When the earnings per share are negative, the diluted earnings per share are identical t o the basic earnings per share. Own shares held recorded as a reduction in consolidated shareholders’ equity are not included in the calculation of earnings per share.

Customer receivables

France Telecom does not consider itself exposed to a concentration of credit risk with respect to trade accounts receivable due to i t s large and diverse customer base (residential, professional and large business customers). Allowances are recorded on the basis of an evaluation of the risk of non-recovery of receivables. The allowances are based on an individual or statistical assessment of this risk.

Customer receivables which are securitized are removed from the heading “Trade accounts receivable, less allowances” when the rights and obligations attached to such receivables are definitively transferred to third parties. Residual interests held in divested receivables under varying forms (subordinated shares, deferred consideration, etc.) are recorded under “Other Long-term assets, net”. Depreciation of such interests, determined based on the risk of non-recovery of the receivables divested, i s presented as a reduction in “Other long-term assets, net” and movements in this are recorded as ”selling, general and administrative expenses”. Costs of divesting receivables are recorded in non operating expenses.

Cash and cash equivalents Cash and cash equivalents consist of cash and highly liquid investments with maturities generally of

Marketable securities Marketable securities are valued at historical cost. When necessary, a provision is recorded on an

three months or less at the time of purchase and are stated at cost, which approximates fair value.

investment-by-investment basis to adjust this value to the average market value over the month prior to period-end or their estimated trading value for securities not publicly traded.

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In uentories Inventories are stated a t the lower of cost or probable net realizable value taking into account

notably future revenue expected from new subscriptions arising from mobile handset sales. Cost represents either acquisition or production costs and is generally determined using the weighted average method.

Other intangible assets Other intangible assets include trademarks, customer relationships, licenses, submarine cable link

Trademarks and customer relationships are recorded a t cost; this i s usually determined a t the time

access rights and patents.

of the goodwill allocation using generally accepted methods, such as those based on revenues, costs or market value.

Trademarks and customer relationships are not amortized; they are subject to an impairment test (see below "- Depreciation of other intangible assets and plant, property and equipment").

Licenses to operate mobile networks are recorded a t historical cost and amortized on a Straight-line basis from the effective date of commercialization of services. The right to operate, in France, a third generation mobile network (UMTS) i s recorded for the fixed portion payable a t the granting of the license. According to the ruling of the urgent issues task force of the CNC, the variable portion (equal to 1940 of the eligible sales generated by the third generation network) will be recorded as an expense in the period incurred. Interest charges related to financing of mobile telephone licenses such as UMTS licenses, are expensed when France Telecom is committed to them.

Purchases of capacity transmission on land and submarine cables (IRUs) are capitalized and amortized on a straight-line basis over the forecast useful life. Income from sale of IRUs is recorded on a straight-line basis in the statement of income over the duration of the contract.

Property, plant and equipment Assets transferred from the French State on January 1,1991, upon the creation of France Telecom as

a public sector operator, were recorded in the opening balance sheet a t valuesjointly approved by the Telecommunications Ministry and the Ministry of Economy and Finance.

Since that date, property, plant and equipment are recorded a t historical cost of acquisition or a t production cost. Cost of networks includes planning and construction costs, as well as site installation and equipment upgrade costs.

Interest arising from debt incurred to finance construction and development of assets is, from January I, 2000, capitalized as part of the cost of such assets during the construction period.

Repairs and maintenance costs, except to the extent that they increase productivity or extend the useful life of an asset, are expensed as incurred.

Leased assets are recorded as an acquisition of an asset and the incurrence of a financial debt when the lease terms effectively transfer the risks and rewards of ownership of the asset to France Telecom. Equally, where France Telecom transfers the risks and rewards of ownership to a third party through a lease contract, this is accounted for as a disposal.

Amortization of plant, property and equipment i s calculated on the basis of the rhythm of consumption of the economic benefits expected from each element of asset. On this basis, the straight line method i s in general used over the following lives:

Buildings and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IO to 30 years Switching, transmission equipment and other network equipment .................... 5 to 10 years Cables and public infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 to 20 years Computers and software (excluding network) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 to s years Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 to 14 years

F-I 3

In uestmen t subsidies France Telecom may receive non-repayable investment subsidies in the form of capital projects

funded directly or indirectly by third parties, primarily local and regional authorities. Subsidies are recorded as a reduction of the cost of the assets financed and, consequently, are recognized in the income statement on the basis of the rhythm of consumption of the economic benefits expected from the corresponding assets.

Depreciation of other intangible assets and plant, property and equipment

Other intangible assets and plant, property and equipment are depreciated when, due to events and circumstances arising in the period (obsolescence, physical damage, significant changes in their usage, performance below forecast, decreasing revenues and other external indicators, etc.) their recoverable value appears durably lower than their carrying value; the recoverable value is the higher of the realizable value and the value in use.

Impairment tests are performed by group of assets by comparing the recoverable value and the carrying value (when a depreciation charge appears necessary, the amount recorded i s equal to the difference between the carrying value and the recoverable value).

For assets destined to be kept and used, the recoverable value is most often determined on the basis of the value in use, representing the value of expected future economic advantages from i t s use and disposal. It is assessed notably by reference to discounted future cash flows determined using economic assumptions and forecast operating conditions used by the management of France Telecom or by reference to replacement cost for used equipment or cost of alternative technologies.

For assets destined to be divested, the recoverable value is determined on the basis of the realizable value, and this i s assessed on the basis of the market value.

Investment securities

Investment securities are stated a t cost, including any associated direct costs. An allowance is recorded when the value in use, based upon management’s analysis, appears to be less than the carrying value, on the basis of different criteria such as market value, the outlook for development and profitability, and the level of shareholders’ equity, and taking into account the specific nature of each investment.

Deferred income taxes Deferred income taxes are recorded on temporary differences between the carrying amounts of

assets and liabilities for financial reporting purposes and the amounts used for tax purposes, as well as those arising from loss carry forwards. Deferred tax assets are provided for to the extent that the recovery of these taxes is not considered probable.

France Telecom uses the liability method under which deferred taxes are measured applying the tax rates enacted a t the end of the accounting period, as applicable at the time the temporary difference i s expected to reverse. Where significant, deferred tax assets and liabilities are discounted when reversals can be reliably scheduled.

Debt issuance costs Debt issuance costs are amortized over the term of the related debt instrument.

Purchase of own shares Own shares held by France Telecom are reflected in the consolidated balance sheet a t their

acquisition cost as a reduction in shareholders’ equity except for those held in share price stabilization transactions, which are recorded as marketable securities. Gains and losses on disposals of own shares recorded as a reduction in shareholders’ equity, including related taxes, are recorded within shareholders’

F-I 4

equity. Allowances recorded against own shares held within investment securities in the single company financial statements of France Telecom SA, as well as provisions for risk relating to commitments to repurchase own shares, are eliminated on consolidation.

Derivative Jnancial instruments

France Telecom manages interest rate and foreign currency risks using derivative financial instruments including interest rate swaps, interest rate cap and floor contracts, foreign exchange futures contracts on organized forward markets, currency swaps and currency options. A l l such instruments are entered into for hedging purposes.

Income and costs resulting from the use of these instruments are recorded in the consolidated statement of income on a symmetrical basis with the underlying transaction being hedged:

Differences between interest receivable and interest payable on swaps, caps and floor contracts designated as hedges, as well as premiums paid for these operations or discounts, are recorded in the consolidated statement of income over the life of the contract as an adjustment to interest expense;

Initial differences between the negotiated term rate and the fixing rate for the day on forward exchange contracts and currency swaps designated as hedging operations are recorded in income over the life of the contract as an adjustment to interest expense. Subsequent gains and losses generated on these contracts due to fluctuations in exchange rates are recorded as exchange rate corrections resulting from the item hedged;

Gains and losses arising on contracts designated as hedges of identifiable firm commitments or identifiable future transactions are deferred and taken into account in the valuation of the transaction a t maturity.

Certain operations which respect France Telecom’s hedging policy have not been accounted as hedging operations. Such operations are evaluated as follows:

For operations on organized markets, margin calls are recorded directly in the statement of income.

Net unrealized losses, calculated on instruments negotiated over the counter, are fully provided for.

Unrealized gains on instruments negotiated over the counter are recorded upon unwinding of the position.

Provisions for risks and charges

Provisions are recorded when, a t the end of the period, there is an obligation for the group with respect to a third party for which it i s probable or certain that this will create an outflow of resources to the third party, without a t least an equivalent return expected from the third party.

This obligation may be legal, regulatory or contractual in nature. It may also be derived from the practices of the group or from public commitments having created a legitimate expectation on the part of such third parties that the group wil l assume certain responsibilities.

The estimate of the amount in provisions corresponds to the expenditure which it is likely that the group is to bear to settle i t s obligation. If no reliable estimate of the amount can be made, no provision i s recorded; information i s then presented in the notes to the financial statements.

Contingencies, representing an obligation which i s neither probable nor certain a t the time of drawing up the financial statements, or a probable obligation for which the cash outflow i s not probable, are not recorded. Information about them is presented in the notes to the financial statements.

Pension plan for French civil servants

Civil servants employed by France Telecom are eligible to receive retirement benefits from the civil servant and military personnel defined benefit pension plan, which i s administered by the French State.

The “France Telecom Law” (FT law) (French law n”96-660 of July 26,1996) states that France Telecom’s obligation is limited to a defined annual contribution. As a result, France Telecom has no additional liability either for shortfalls that might arise in the pension plan for i t s civil servant employees, or for plans of other civil servants.

Early retirement plan for French civil servants

In accordance with the “FT law”, France Telecom has introduced an early retirement plan for civil servants and other employees. The plan provides that until December 31,2006, civil servants and other employees working for France Telecom who attain the age of 55 with 25 years service, may elect for early retirement. Between the early retirement age of 55 and the normal retirement age of 60, participants will receive 70% of their salary. In addition, participants receive a lump sum indemnity, which amounts to one year of early retirement salary if they elect for early retirement at the age of 55, and which declines progressively to zero as the age a t which they elect approaches normal retirement age.

A provision corresponding to an actuarial measurement of the liability under this plan has been recorded (see Note 18). Actuarial assumptions are monitored and modified based upon experience.

Changes in actuarial assumptions are accounted for from the anniversary of the plan, in the consolidated statement of income in the year of change, and on a pro rata basis over future service periods until the end of the plan as personnel opt for early retirement.

Other retirement plans

Where defined benefit plans exist, the actuarial cost of commitments i s accounted for each year over the service life of the employees. The change in assumptions is reflected in the income statement over the average residual employee service life. The costs relating to defined benefit systems are recorded in the year incurred.

Retirement indemnities and other pension plans

In certain countries, legislation requires that lump sum retirement indemnities are paid to employees a t certain periods based upon their years of service and compensation a t retirement. The actuarial cost of this unfunded obligation i s charged annually to income over the employees’ service lives. The effect of changes in assumptions i s accounted for in the consolidated statement of income over the average remaining service l i fe of employees.

Post-retirement benefits other than pensions

France Telecom has commitments to provide certain additional post-retirement benefits such as telephone equipment, credit card fees and various other benefits to retirees.

France Telecom recognizes the expected actuarial cost of these post-retirement benefits in the consolidated statement of income over the service lives of the eligible employees.

The effect of changes in actuarial assumptions is accounted for in the consolidated statement of income over the average remaining service lives of employees.

Share subscription or share purchase plans

Issuances of share subscription options or share purchase options are not recorded in the consolidated income s ta tement .

F-16

EXHIBIT F

France Telecom Corporate Solutions L.L.C. Demonstration of Technical and Managerial Capability

The Members of the senior management team responsible for the operations of the Applicant have extensive experience in the telecommunications industry and highly- qualified technical staff has been assigned to work with Applicant will ensure that Applicant’s operations will meet the most demanding standards for service quality and reliability.

As demonstrated by the attached resumes, Applicant has assembled an outstanding and experienced team of industry professionals to achieve its mission of market leadership. The founding members of the executive and technical teams have held key technical, marketing and financial positions at leading communications companies, including France Telecom, Equant and Global One.

Therefore, Applicant clearly possessed the requisite managerial and technical capability to provide intrastate telecommunications services in the State.

WASHINGTON 257385~1

Bernard Perrillon Vice President

France Telecom Integration and Outsourcing Business Unit France Telecom, SA

Bernard Perrillon was named Vice President of Integration and Outsourcing Business Unit of France Telecom Group in October 2001. He is in charge of Finance, quality control and integration services. The Business Unit in charge of Integration and Outsourcing operates several contracts signed with large accounts of France Telecom Group. Prior to this appointment, Mr. Perrillon served as France Telecom’s Vice President for International Development of the Corporate Division, a position he held for one year and half.

Mr. Perrillon, began his professional career in 1982 in the operations of mobile services in France Telecom. From 1985 to 1987, he attended the scolarship of ENA.

From 1988 to 1991, he was managing the cost analysis department of France Telecom purchasing division. Then, he was managing director of Interpac Italia the first italian subsidiary of Transpac in Italy. From 1995 to 1997, he was in charge of the controlling department of a regional branch of France Telecom. In early 1997, he joined France Cables et Radio de Mexico for more than 3 years, where he was executive vice president in charge of finance and business development.

Jean-Sebastien Falisse 10394 Adel Road

22124 Oakton, Va, USA Tel: (703) 975 6302

CAREER EXPERIENCE

FRANCE TELECOM, Americas Regional Headquarters: Herndon, VA - USA Chief Financial Officer April 2002 - present

Created the Finance and IT support function to provide all Finance, Information Technology and Tax related support to France Telecom Long Distance and to other France Telecom activities in the Americas, ensuring data integrity, timely reporting, and performance against financial objectives.

Establishes and monitors required budgets, issue timely reports, analyzesheports against variances, Manages the function of Transaction Processing for FTLD in the US and in Canada. Supports external and France Telecom internal audit initiatives, Ensures timely and accurate filings with the tax authorities and Co-ordinates tax matters for the region.

Provides IT and Application support to 300 users in the region, manages the web based application that serves the finance and reporting needs of all regions of FTLD, drove the implementation of the FTLD subsidiary accounting system.

Process owner and lead on the development, formulation, implementation of all processes, methods and procedures, Information Systems related to financial reporting, internal controls, tax compliance and reporting.

EQUANT Reston, VA - USA Grow Controller July 200 1 - March 2002

Heads up the corporate controller’s function assisting all 400+ entities worldwide in reporting accurate and timely management and legal entity results in a uniform format, in accordance with US GAAP.

Led the integration of the accounting and reporting functions of the legacy Equant, Global One and SITA companies in 225 countries; implemented, staffed up and managed 5 regional organizations, redefined roles and responsibilities, initiated the centralization of the functions to reduce the 700+ staff headcount and create synergies and efficiencies.

GLOBAL ONE Corporate Headquarters: Reston, VA - USA Assistant Vice President - Group Accounting & Consolidation June 2000 - June 2001

Reporting to the Chief Financial Officer. With a team of 53 in the US and in Europe, assumes overall responsibility for Global One General Ledger accounting and consolidation. Supervises the accounting function in 65 countries as well as in the US based Shared Service Center established to cluster accounting responsibilities and maintain state of the art central processes.

Owns the monthly French GAAP reporting process to the shareholders. Manages and coordinates the relationships with the external auditors.

Jean-Sebastien Falisse - July 2002

Turned the Company in 3 months to a US GAAP compliant registrant with the SEC and the COB. Implemented low cost processes for improved reporting of the Company’s Fixed Assets. Developed financial systems and procedures to support the monthly multi currency Transfer Pricing Process.

GLOBAL ONE Corporate Headquarters: Brussels, Belgium Senior Director - Corporate Finance, Accounting & Reporting Nov. 1998 - May 2000

Responsible for the monthly consolidation and reporting of the group’s financial information. Reports IAS compliant financial information to the shareholders. Managed a team of 35 in Brussels (Belgium), Reston (Virginia, US), Paris (France) and Bonn (Germany).

Financial Officer of the headquarter entities in Belgium, France, Germany and the US and of the group’s clearing activities in Ireland and holding companies in the Netherlands.

Company’s interface with shareholders, other departments and external auditors with respect to accounting matters.

Established, disseminated, provided advice on and ensured compliance with a US GAAP based policies and procedures manual for the group.

Performed all internal transfer pricing processes to allocate headquarters and network costs and support business model and shareholders decisions.

Coordinated the due diligence exercise conducted by the shareholders prior to the buy out by France Telecom. Acted as single point of contact for all transactions with the shareholders. Helped saving significant amounts on long outstanding disputes.

Implemented a $184 million IAS compliant restructuring provision, set up reporting processes to gather information from Finance and non Finance departments around the world

Participated to the wind up of the Headquarter entity in Brussels, maintaining restructuring and reorganization costs to the lowest level possible.

Director - Consolidation & Reporting July 1998 - NOV. 1998

Responsible for the Company’s management and statutory financial reporting process to senior executives, shareholders, external auditors and the European Commission.

Review business units and regional results, performed detailed variance analysis and coordinated the reporting of financial results. Significantly improved the review and reporting process to streamline the legal and management consolidation processes.

Managed and coordinated external audit processes.


COOPERS & LYBRAND Belgium/Luxembourg/Zaire/Burundi Director Audit Brussels, Partner Audit Luxembourg June 1990 - July 1998

Responsible of a client based portfolio in the audit practice. Ultimately responsible for audit reports and opinions on IAS, US, French, Belgian, German, Luxembourg, Dutch GAAP financial statements, due diligence review reports and for providing financial and management advice.

Lead Member of the European Audit Training Group and responsible for Audit training program for the Belgium / Luxembourg firm. Member Telecom Leadership Group.

Speaker at Insurance / Reinsurance seminars in Europe. Developed a course on Financial Instruments for the firm and for the banks in Luxembourg

Major assignments included

sugar company in Burundi and for the floating of a Belgian high tech company;

agency and in the regulatory reporting of a major Belgian telecommunication company,

(US GAAP, structural reorganization, shareholder reporting, consolidation tool)

Due diligence for acquisition target of a gold mine in Zaire, for privatization of a

Project manager for a consulting project in the reorganization of a governmental

Advice to international telecommunication companies on various finance aspects

From March through June 1998, dedicated to Global One to assist the VP Accounting and Reporting, responsible for the monthly consolidation and reporting. Supervised the accounting function in the Headquarter entities in Europe and in the United States.

Manaper Audit - Zaire June 1988-June 1990

Manage audit assignments for the World Bank and for the IMF in Kinshasa and Lubumbashi in the mining, petrol refinery sectors.

Auditor - Brussels September 1985 -June 1998

EDUCATION Institut des Reviseurs d’Enfreprises Luxembourg Chartered Accountant

University of Louvain Louvain la Neuve, Belgium Institut d’Administration et de Gestion Bachelor’s Degree in Applied Economics, cum laude

September 1994

June 1985

OTHER English, French, Knowledge of Dutch


WORK EXPERIENCE CHRONOLOGY

July 2001 - PRESENT

June 2000- June 2001

June 1998- May 2000

June 1994- May 1998

Feb 1993 - June 1994

RUSSEL ALAN EMERSON 641 0 Brass Bucket Ct Laytonsville Md 20882

3019260386

Head CPSP: Americas/TINOS Reg Dir Americas Outsourcing and Complex Projects :all telecom

EQUANT

Dir Prog Mgmt; Americas Region All Global One Data services

GLOBAL ONE

Dir Prog Mgmt, AMEA Region Asia PacMiddle East/Russia/Africa All Global One Data services

GLOBAL ONE

Dir Prog Mgmt, Asia Pacific Region All Global One services

Group Manager. OPNs PM

GLOBAL ONE

SPRINT INTL Field Opns Logistics Group Network Operations Rollout Network projects: Voice Data: X.25/FR/IP/ FAX Managed all Sprint Intl Opns projects for 2 years

Group Manager, PMs -International Services and Large Projects

May 1990- June 1993 Senior Prog Manager Area Manager, International Services US Domestic and International

Prog Mgr Telecom Intl services

Lt Col United States Marine Corps Aviation career/Pilot

Oct 196 1 - May 1969 US MARINE CORPS

June 1984- Apr 1990

June 1969- May 1984

16 years Mgmt/23 years service.

SPRINT INTL

TELENET

Marc Dandelot President

France Telecom North America

Marc Dandelot was named President of France Telecom North America and Country Manager of France Telecom Group in North America in February 2000. France Telecom operations in North America include Equant (corporate data networks), Globecast (satellite services), FT Long Distance (carrier services), Etrali (services to financial institutions), R&D Labs and Venture Capital. Prior to this appointment, Mr. Dandelot served as France Telecom’s Executive Vice President for International Development, a position he held for four years.

Mr. Dandelot, a lawyer by training, began his professional career in 1973 in European Affairs, specializing in anti-trust regulations. In 1983 he joined France Telecom as a legal advisor and later became the Chief of Staff to the Minister of Telecommunications.

From 1987 to 1990, Mr. Dandelot served as the Chairman and CEO of France Ciibles & Radio, a France Telecom subsidiary. In 1990 he founded a consulting firm focusing primarily on international telecommunications. Mr. Dandelot returned to the France Telecom Group in 1994 as the Chairman of France Telecom holding company Cogecom.

For several years Mr. Dandelot was a professor at the leading Business School and Political Studies Institute in Paris. He has also received the Chevalier de la Legion d’Honneur and Offcier de 1’Ordre National du Merite awards.

In his current position as President of France Telecom North America, Mr. Dandelot is leading the company’s efforts in developing its North America investment strategy.

Mr. Dandelot is a Partner of the New York City Partnershp and Chamber of Commerce, a member of the Board of Directors of the French-American Chamber of Commerce, and member of the French-American Foundation.

Resume

Jean NJYOIX

Vice President Integration Services & Outsourcing

Education : 1967 : Ing. ENST (Telecom) Paris

Main professional responsibilities :

Since 2001

Since end 2000

From April I998 to end 2000

From Sept. I993 to April I998

From Dec. 1990 to Sept. 1993

From 1985 to Dec. I990

Before 1985

Complementary Education : - People management'motivation (Krauthammer) - Enterprise Strategy (INSEAD) - Bull's Offer Strategy

General Manager of France Telecom Corporate Solutions

Vice President of DISO (Integration Services & Outsourcing) In charge of complex integration and outsourcing offers (presales) and project management (post sales)

Executive Vice President Expertel FM (Groupe France Telecom) In charge of Outsourcing Development for voice, data and end user services (PBX and LAN)

Director of IBT International Bull Telecommunications

Worldwide management entity responsible for the internal telecommunications of Groupe Bull : "Provide the best telecoms services at the lowest cost". (Operational responsibility over 250 people (France, US, UK, Italy, Germany), about 500 MFF yearly expenses budget and 50 MFF of yearly investments.) Additional missions on Facilities Management business.

Director of Telecommunications and Office Automation for Groupe Bull (DTBG)

Functional responsibility over internal Telecommunications and Office Automation. (architecture, coordination, budget consolidation - 600 MFF) Direct operational responsibility on central structure and part of Telecoms/Office Automation resources in France (100 people, 100 MFF).

Responsible for Validation/Qualification of low range products in Bull's Offer = micros, terminals, servers and UNIX systems

Responsible for Mini6 Support (R&D support for Europe)

Development of Software Products and Systems (mainly in telecoms domains)

Project Management for Bull's Customers (development of specific sofiwares/applications in telecoms domains) (Chu Hanovre, DGT/DRT, CISI, EDF, Banques Populaires, Bibliotheque Nationale, Univ. BrCme, ...)

Miscellaneous :

- Bilingual French/German - English - WW permanent usage

0

NICOLAS FrCdCric 7463 Somerset Bay Apt B Indianapolis, IN 46240 U.S.A.

+I 317 257 6962 (home) &+1 317 587 4836 (office) & + I 317 828 0943 (mobile)

38 years old, single, without children French Nationality

Formation and diplomas

1980 1981 - 1982 1983 - 1985

1986

“Baccalaureat C” “MathCmatiques supkrieures et speciales”. Engineer school : Ecole Centrale de Lyon (ECL) University degree: DEA Electronique Specialisation at “Sup Telecom (ENST)” in Telecommunication and Networks

Professional Experience (13 years)

E un etcom/Glo bal On e/Equan t (1 996-2002)

Started in 1996 at Eunetcom as Service Manager for one of the biggest Eunetcom multinational customer (JTI) which is still a customer from Equant.

In 2001, director of a worldwide team of 30 customer service managers spread over various countries in Europe and Asia Pacific region This team ensured the service management of 100 multinational customer networks for Voice, IP, Frame Relay or ATM products.

The responsibility of the director was particularly:

To lead the organisation in defining role, staffing, structure, as well as improving processes and tools for Service Management for Global One customers in relation with Customer Care, Product Management and GCSC. To ensure chargeback of service management activities to selling entities ($250,000 monthly) To define and set-up of homogeneous Service Management Reporting tools and processes for all customers

As of 2002, program and service manager of the outsourcing TINOS project for the Americas region. The Tinos Program & Service Manager Americas is responsible at the region level for the following, including services in and out of Equant port-folio:

Manage the day-to-day relationship with the customer

implementation, local contract transfers, . . .) Management and relationship of the local/regional sub-contractors for non-standard services, including ordering of services/equipment, validation of invoices.

* Supporting the Tinos Regional Manager during the different project phases (process

Ensuring good operation of implemented local processes (charge-back, ordering, payment of sub-contractors, maintenance,. . .) Ensuring compliance with Quality and Service Level Agreement Targets,. Interventions on major troubles or major customer service issues Consolidate Service Management Reports Launching & leading of regional project reviews. Responsible for receiving, processing and implementing all customer changes (new orders, moves, etc..), including standard and non-standard services. Ensuring customer invoices are accurate and timely issued. Reviewing with the customer any billing issues.

Bull Ingenierie (1 988-1 996) (Subsidiary of Bull computer company specialised in system integration)

1988 to I996 Several activities as Manager of the network and data exchange department 0 Project Manager 0 Realisation of internet security studies. (architecture and communication protocols, networks, electronic mail and directory solutions, internet) 0 Management and follow-up of Research and Development activities. 0 Participation in human resource allocation to projects (training and management of the fifteen engmeers of the department) 0 Pre-sales activities and consulting in product or project implementation phase.

0 Languages

Fluent in English Some German and Spanish

0 Technical Expertise

Systems UNIX, WINDOWS Computer Languages C, Visual Basic, Network Mail Others

ISO, TCP/IP, X25, Ethernet, Lan Manager, Novel1 X400, X500, SMTP, Ms-Mail, cc:Mail, gateways Word, Excel, Access, PPR (Nortel Performance Reporting tool)

0 Other experience or activities

Sport and hobbies Tennis, Ski, Bridge Teaching 0 Teacher in Gabon for undergraduate students during two

scholar years (1 986 to 1988)

EXHIBIT G

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France Telecom Corporate Solutions L.L.C. 1s 2f b\\ ‘a3RP.S.C. TariffNo. 1 Original Page No. 1

TITLE PAGE

FRANCE TELECOM CORPORATE SOLUTIONS L.L.C.

REGULATIONS AND SCHEDULE OF INTRASTATE CHARGES

APPLYING TO LOCAL EXCHANGE COMMUNICATIONS SERVICES

WITHIN THE STATE OF ARKANSAS

This Tariff contains the service description and rates generally applicable to telecommunications services furnished by France Telecom Corporate Solutions L.L.C., hereinafter referred to as the “Company”, between and among points within the State.

The name, title, and street address of this Tariffs Issuing Officer are located on the bottom of each Tariff page.

The services listed herein may be provided by means of fiber or copper wire, microwave or any other suitable technology or a combination thereof.

Issued: ,2003 Effective: ,2003

Issued by: Jean-Sebastien Falisse, Treasurer France Telecom Corporate Solutions L.L.C. 2300 Corporate Park Drive, Mailstop SP0606 Herndon, VA 20 17 1

1

h:,;. . - \ ? A .

France Telecom Corporate Solutions L.L.C. 2l&%.C. Tariff No. 1 Original Page No. 2

, ” / / a CHECK SHEET + ._ LJ

The Title Page and pages listed below of this Tariff are effective as of the date shown. Revised pages contain all changes from the original Tariff that are in effect as of the date indicated.

Page Numberof - Numberof & Numberof Numberof No. Revision No. Revision No. Revision No. Revision

ALL PAGES ARE ORIGINAL.

* New or Revised Page.

Issued: ,2003 Effective : ,2003


France Telecom Corporate Solutions L.L.C.

f - 7 . ~ 1.

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k I:. h t '

'? AR2'kS.C. Tariff No . 1 l i t 0 * inal Page No . 3 's 113 21 ur9 €f?J

TABLE OF CONTENTS

TITLE PAGE ......................................................................................................................................... 1

CHECK SHEET .................................................................................................................................... 2

TABLE OF CONTENTS ...................................................................................................................... 3

EXPLANATION OF NOTES .......................................................................................................... 4

TARIFF FORMAT ................................................................................................................................ 4

Section 1 . PRELIMINARY STATEMENT, APPLICABILITY AND AVAILABILITY ................. 6

Section 2 . GENERAL RULES AND REGULATIONS ..................................................................... 7

Section 3 . CONNECTION CHARGES ............................................................................................ 31

Section 4 . SERVICES AND RATE STRUCTURE ......................................................................... 32

Section 5 . SUPPLEMENTAL SERVICES ....................................................................................... 44

Section 6 . RESIDENTIAL NETWORK SWITCHED SERVICES ................................................. 45

Section 7 . SPECIAL SERVICES AND PROGRAMS ..................................................................... 46

Section 8 . SPECIAL ARRANGEMENTS ........................................................................................ 50

Section 9 . LOCAL CALLING AREAS ............................................................................................ 51

Section 10 . EXPLANATION OF TERMS ....................................................................................... 52

Section 11 . BILLING AND COLLECTION ..................................................................................... 56

Issued: . 2003 Effective: . 2003

Issued by: Jean-Sebastien Falisse. Treasurer France Telecom Corporate Solutions L.L.C. 2300 Corporate Park Drive. Mailstop SP0606 Herndon. VA 20 17 1

AR P.28: Tariff No. 1 c r

France Telecom Corporate Solutions L.L.C. CEC 5 \PJ 2p#wjlPage No. 4

, .w,

EXPLANATION OF NOTES . b

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(C) To signify a changed regulation.

(D) To signify discontinued material, including listing, rate, rule or condition.

(I) To signify an increase in a rate.

(M) To signify material relocated from or to another part of Tariff schedule with no change in text, rate, rule, or condition.

(N) To signify new material including listing, rate, rule or condition.

(R) To signify reduction.

(T) To signify change in wording of text but no change in rate, rule or condition.

TARIFF FORMAT

Page Numbering - Page numbers appear in the upper right corner of the page. Pages are numbered sequentially. However, new Pages are occasionally added to the Tariff. When a new Page is added between Pages already in effect, a decimal point is added. For example, a new Page added between Pages 14 and 15 would be 14.1.

Page Revision Numbers - Revision numbers also appear in the upper right corner of each page. These numbers are used to determine the most current Page version on file with the Commission. For example, the 4th revised Page 14 cancels the 3'd revised Page 14. Because of various suspension periods, deferrals, etc. the Commission follows in their Tariff approval process, the most current Page number on file with the Commission is not always the Tariff page in effect.



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France Telecom Corporate Solutions L.L.C. AR P.S.C. Tariff No. 1 to 21 fd ‘030riginal Page NO. 5

cEC

TARIFF FORMAT (CONT’D) ~ ” .a- 1)-

: Paragraph Numbering Sequence - There are six levels’ ofpal%&aph coding. Each level is subservient to its next higher level:

1. 1.1 1.1.1 1.1.1 (a) 1.1.1 (a)l . 1.1.1 (a)l .(a) 1.1.1 (a) 1 .(a)(;)

Check Sheets - When a Tariff filing is made with the Commission, an updated check page accompanies the Tariff filing. The check sheet lists the pages contained in the Tariff, with a cross reference to the current revision number. When new pages are added, the check sheet is changed to reflect the revision. All revisions made in a given filing are designated by an asterisk (*). The Tariff user should refer to the latest check sheet to find out if a particular page is the most current on file with the Commission.

Issued: , 2003 Effective: ,2003


France Telecom Corporate Solutions L.L.C. *?I;*i.

C” ‘ ’ AR P.S.C. Tariff No. 1

UEC 23, Bd&hal Page No. 6

SECTION 1 - PRELIMINARY STATEMENT, APPLICABILITY AND AVAILABILITY

I . 1 PRELIMINARY STATEMENT

a “ “-%

t > . , .‘Y 5

This Tariff sets forth rates and rules of France Telecom Corporate Solutions L.L.C. (“FTCS” or the “Company”) applicable to its provision of resold competitive local exchange service, including within the State of Arkansas.

This Tariff sets forth the service offerings, rates, terms and conditions that apply to resold local exchange telecommunications service provided by Company to business customers within the State of Arkansas. The Company does not provide residential local exchange services at this time. This Tariff applies only for use of services provided by Company for communications between points within the State of Arkansas, including use of Company’s services to complete an end-to-end intrastate communication.

The rates and rules contained herein are subject to change pursuant to the rules and regulations of the Commission.

1.2 APPLICABILITY

This Tariff applies to resold local exchange telephone service between points in Arkansas. Such service is provided 24 hours per day, seven days per week. Service is offered using the facilities of the LEC and may be offered in combination with resold services provided by other certificated carriers. Service is provided subject to the availability and economic feasibility of necessary service, equipment and facilities.

1.3 AVAILABILITY

The Company offers this service in the service areas in which it has been certified by the Arkansas Public Service Commission and in which the Company has available required network facilities or is able to lease required network facilities to enable the offering of local service. Only Customers which have subscribed to Company’s interstate and international services pursuant to an agreement with the Company may apply for the service offerings contained in this Tariff. Interstate and international services are subject to the jurisdiction of the Federal Communications Commission (“FCC”).



France Telecom Corporate Solutions L.L.C. c f '

, I. 1.

I 'A id. ' AR P.S.C. Tariff No. 1

SECTION 2 - GENERAL RULES AND REGULATIONS

2.1 USE OF FACILITIES AND SERVICE

2.1.1 Limitation of Service, Equipment or Facilities

a. Service is offered subject to the availability of the necessary facilities and/or equipment and subject to the provisions of this Tariff. The Company may decline applications for Service to or from a location where the necessary facilities or equipment are not available. The Company may discontinue furnishing Service in accordance with the terms of this Tariff.

b. The Company reserves the right to discontinue or limit Service when necessitated by conditions beyond its control. Examples of these conditions are more fully set forth elsewhere in this Tariff or when Service is used in violation of the provisions of this Tariff or the law.

c. The Company does not undertake to generate content messages, but offers the use of its Service when available. As more fully set forth elsewhere in this Tariff, the Company shall not be liable for errors in transmission or for failure to establish connections.

d. The Company reserves the right to discontinue Service, limit Service, or to impose requirements as required to meet changing regulatory or statutory rules and standards, or when such rules and standards have an adverse material affect on the business or economic feasibility of providing Service, as determined by the Company in its reasonable judgment .

e. The furnishing of Service under this Tariff is subject to the availability on a continuing basis of all the necessary facilities and/or equipment. FTCS may decline applications for service to or from a location where the necessary facilities or equipment are not available. FTCS also reserves the right to make changes to equipment, service components, and/or network configurations as may be required. FTCS may discontinue furnishing Service in accordance with the terms of this Tariff.



France Telecom Corporate Solutions L.L.C. W . S . C . Tariff No. 1 3 113 21 riginal PageNo. 8

SECTION 2 - GENERAL RULES AND REGULATION$(CONT’D) ‘ :? F a ~ * Lb

2.1 USE OF FACILITIES AND SERVICE (CONT’D)

2.1.1 Limitation of Service, Equipment or Facilities (Cont’d)

f. FTCS reserves the right to deny service to any person or entity: (A) who, in FTCS’s judgment, presents an undue risk of nonpayment, refuses to comply with the deposit requirements set forth in this Tariff, or does not pass a credit check; or (B) if FTCS believes that the person’s or entity’s use of the Service would violate the provisions of this Tariff or any applicable law or regulation, or if any applicable law or regulation restricts or prohibits provision of the Service to that person or entity; or (C) if FTCS determines in its sole discretion that facilities are not available to provide the Service; or (D) if FTCS determines in its sole discretion that any order for Service, letter of authorization and/or third party verification is not in conformance with any applicable law or regulation; or (E) the Service requested has been discontinued; or (F) if an order for the Service may be denied under the terms of any carrier, switched or independent sales representative agreement.

g. Service may be discontinued by FTCS, at any time and without notice to its Customers, by blocking traffic to or from certain cities, NXX exchanges, or individual telephone stations, by blocking call origination for FTCS’s services, or by blocking calls using certain Customer authorization codes and/or access codes, when FTCS deems it necessary to take such action to prevent unlawful andor unauthorized use of its services. In addition, FTCS may take any of the foregoing actions in the case of actual or anticipated non-payment for its service. In order to control fraud, FTCS may refuse to accept Calling Card, Collect Calling, and/or Third Party calls which it reasonably believes to be unauthorized or invalid and/or may limit the use of these billing options to or from certain areas within the State of Arkansas.


.’-* . .I, i

A H L f ’

France Telecom Corporate Solutions L.L.C. q- ‘8k P.S.C. Tariff No. 1

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D) -** “P

2.1 USE OF FACILITIES AND SERVICE (CONT’D) k

2.1.1 Limitation of Service, Equipment or Facilities (Cont’d)

h. FTCS reserves the right to refuse to provide service to or from any location where it has not ordered access facilities, installed network interconnections, or the necessary facilities and/or equipment are not available, acceptable, or justifiable. FTCS also reserves the right to make changes to equipment, service components, andor network configurations as may be required.

1. The provision of service will not create a partnership or joint venture between FTCS and the Customer nor result in joint service offerings to their respective authorized users.

j. Use of Service Mark

1. No Customer shall use any service mark or trademark of the Company or refer to Company in connection with any product, equipment promotion, or publication of the Customer without the prior written consent of the Company.

2.1.2 Limitations on Liability

a. The liability of FTCS for damages of any nature arising from errors, mistakes, omissions, interruptions, or delays of FTCS, its agents, servants, or employees, in the course of establishing, furnishing, rearranging, moving, terminating, maintaining, restoring, or changing the service or facilities or equipment shall not exceed an amount equal to the charges applicable under this Tariff (calculated on a proportionate basis where appropriate) to the period during which such error, mistake, omission, interruption or delay occurs.



r

France Telecom Corporate Solutions L.L.C. ~ ‘ P . S . C . Tariff No. 1 .,

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D) . I I , 3

. J 2.1 USE OF FACILITIES AND SERVICE (CONT’D) I

2.1.2 Limitations on Liability (Cont’d)

b. In no event shall FTCS or any of its affiliates be liable to Customer, its customers or any of their affiliates under this Tariff for any loss of profit or revenue or for any incidental, consequential, indirect, punitive or similar or additional damages incurred or suffered as a result of incorrect or defective transmissions, or any direct or indirect consequences thereof, while using the Services, performance, non-performance, termination, breach, or other action or inaction, on the part of FTCS, under this Tariff, even if Customer advises FTCS of the foreseeability, possibility, likelihood, probability or certainty of such loss or damage.

c. When the services or facilities of other entities are used separately or in conjunction with FTCS’s facilities or equipment in establishing connection to points not reached by FTCS’s facilities or equipment, FTCS shall not be liable for any act or omission of such other entities or their agents, servants or employees. FTCS shall not be liable for any act or omission of vendors supplying equipment to Customer nor for claims regarding the performance of such vendor supplied equipment.

d. FTCS shall not be liable for any failure of performance hereunder if such failure is due to any cause or causes beyond its reasonable control as determined by FTCS. Such causes shall include, without limitation, acts of God, fire, explosion, vandalism, cable cut, storm or other similar occurrence, any law, order, regulation, direction, action or request of the United States government or of any other government or of any civil or military authority, national emergencies, insurrections, riots, wars, strikes, lockouts or work stoppages or other labor difficulties, supplier failures, shortages, breaches or delays, unavailability of rights-of-way or materials, or preemption of existing service to restore service in compliance with the decisions, rules, regulations and orders of the Commission or any other federal, international, state, or local governmental agency or authority.


Is sued by: Jean- S eb as t i en F ali ss e, Treasurer France Telecom Corporate Solutions L.L.C. 2300 Corporate Park Drive, Mailstop SP0606 Herndon, VA 201 71

E .

. . France Telecom Corporate Solutions L.L.C. AR P.S.C. Tariff No. 1

1 . I _ , t 4 , 1 i b~ Original Page No. 11 . I , ,_n 4 ” tq7 *..a -

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D) ..

2.1 USE OF FACILITIES AND SERVICE (CONT’DJ ’


e. FTCS shall not be liable for interruptions, delays, errors, or defects in transmission, or for any injury whatsoever, caused by the Customer, the Customer’s agents, or Authorized Users, or by facilities or equipment provided by the Customer. FTCS shall not be liable for any act or omission by any entity furnishing to the Company or to the customer facilities or equipment used for or with the services the Company offers. The Company shall not be liable for the claims of vendors supplying equipment to Customers of the Company which may be installed at the premises of the Company. The Company shall not be liable for the performance of said vendor or vendor’s equipment.

f. FTCS does not guarantee or make any warranty with respect to any equipment provided by it where such equipment is used in locations containing an atmosphere which is explosive, prone to fire, dangerous, or otherwise unsuitable for such equipment. Customers and Authorized Users indemnify and hold FTCS harmless from any and all loss, claims, demands, suits or other action, or any liability whatsoever, whether suffered, made, instituted, or asserted by any party or persons, for any personal injury to or death of any person or persons, and for any loss, damage, or destruction of any property, whether owned by the Customer, Authorized User, or others, caused or claimed to have been caused directly or indirectly by the installation, operation, failure to operate, maintenance, removal, presence, condition, location, or use of such equipment so used.

g. The Company is not liable for any defacement of or damage to the premises of a Customer or end-user (or authorized or joint user) resulting from the furnishing of services or equipment on such premises or the installation or removal thereof, when such defacement or damage is not the result of the gross negligence or willful misconduct on the part of the agents or employees of the Company.



3

r "

France Telecom Corporate Solutions L.L.C. AR P k C . Tariff No. 1

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT'D) I r * ,

. uy, 2.1 USE OF FACILITIES AND SERVICE (CONT'D) z i

2.1.2 Limitations on Liability (Cont'd)

h. The Company shall not be liable for any damages resulting from delays in meeting any service dates due to delays resulting from normal construction procedures. Such delays shall include, but not be limited to, delays in obtaining necessary regulatory approvals for construction, delays in obtaining right-of-way approvals and delays in actual construction work.

1 . The Company shall not be liable for any damages whatsoever to property resulting from the installation, maintenance, repair or removal of equipment and associated wiring unless the damage is caused by the Company's willful misconduct or negligence.

j. The Company shall not be liable for any damages whatsoever associated with service, facilities, or equipment which the Company does not furnish or for any act or omission of Customer or any other entity furnishing services, facilities or equipment used for or in conjunction with service.

k. THE COMPANY MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED EITHER IN FACT OR BY OPERATION OF LAW, STATUTORY OR OTHERWISE, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR USE, EXCEPT THOSE EXPRESSLY SET FORTH HEREIN.


Issued by: Jean-Sebastien Falisse, Treasurer France Telecom Corporate Solutions L.L.C. 2300 Corporate Park Drive, Mailstop SP0606 Hemdon, VA 20 17 1


i .

AR P:S.C. Tariff No. 1 r , . : “ ’ nfi oydigwl I i Page No. 13 I” L J f.-

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D) I::

2.1 USE OF FACILITIES AND SERVICE (CONT’D) h bj


1. The Customer and any authorized or joint users, jointly and severally, shall indemnify and hold the Company harmless from claims, loss, damage, expense (including attorney’s fees and court costs), or liability for patent infringement arising from (1) combining with, or using in connection with facilities the Company furnished, facilities the customer, Authorized User, or joint user furnished, or (2) use of facilities the Company furnished in a manner the Company did not contemplate and over which the Company exercises no control and from all other claims, loss, damage, expense (including attorneys’ fees and court costs), or (3) liability arising out of any commission or omission by the Customer, Authorized User, or joint user in connection with the Service. In the event that any such infringing use is enjoined, the Customer, Authorized User, or joint user, at its option and expense, shall obtain immediately a dismissal or stay of such injunction, obtain a license or other agreement so as to extinguish the claim of infringement, terminate the claimed infringing use, or modify such combination so as to avoid any such infringement. In addition and without limitation, the Customer, Authorized User, or joint user, shall defend, on behalf of the Company and upon request by the Company, any suit brought or claim asserted against the Company for any such slander, libel, infringement, or other claims.

m. The Company shall not incur any liability, direct or indirect, to any person who dials or attempts to dial the digits “9-1-1” or to any other person who may be affected by the dialing of the digits “9-1-1”. Customer agrees to advise its users that as to Company’s data services, the “9-1-1” emergency dialing does not connect to the local public safety answering point.



12 * P France Telecom Corporate Solutions L.L.C. AR P.S.C. Tariff No. 1

\’l: i, >? Iq?Original .I J Page No. 14 i 1 ’., L r W )f

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D) . - . “

2.1 USE OF FACILITIES AND SERVICE (CONT’D) , L

2.1.3 Service Connections and Facilities on Customer’s Premises

a. All Service along the facilities between the point identified as the Company’s origination point and the point identified as the Company’s termination point will be furnished by the Company, its agents or contractors.

b. Customer shall allow Company continuous access and right-of-way to Customer’s premises to the extent reasonably determined by the Company to be appropriate to the provision and maintenance of services, equipment, facilities and systems relating to this Tariff.

c. The Company may undertake to use reasonable efforts to make available services to a Customer, on or before a particular date subject to the provisions of and compliance by the Customer with the regulations contained in this Tariff. The Company does not guarantee availability by any such date and shall not be liable for any delays in commencing Service to any Customer.

d. The Company undertakes to use reasonable efforts to maintain only the facilities and equipment that it furnishes to the Customer. The Customer, joint user, or authorized user may not, nor may the Customer permit others to, rearrange, disconnect, remove, attempt to repair, or otherwise tamper with any of the facilities or equipment installed by the Company, except upon the written consent of the Company.

e. Title to all facilities provided by Company, including Terminal Equipment, shall remain with the Company. The operating personnel and the electric power consumed by such equipment on the premises of the Customer shall be provided by and maintained at the expense of the Customer.

f. Equipment the Company provides or installs at the Customer’s premises for use in connection with the Services the Company offers shall not be used for any purpose other than that for which the Company provided it.



l - 4

t France Telecom Corporate Solutions L.L.C. ’ AR P:S.C. Tariff No. 1 y g y l Page No. 15 ::I CE j h ‘>

L.-d - SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D)

2.1 USE OF FACILITIES AND SERVICE (CONT’D) > -=yIrr

2.1.3 Service Connections and Facilities on Customer’s Premises (Cont’d)

g. Customer is responsible for ensuring that Customer-provided equipment connected to Company equipment and facilities is compatible with such equipment and facilities. The magnitude and character of the voltages and currents imposed on Company-provided equipment and wiring by connection shall be such as not to cause damage to the Company- provided equipment and wiring or injury to the Company’s employees or other persons.

h. The Company shall not be responsible for the installation, operation, or maintenance of any Customer-provided communications equipment. Where such equipment is connected to the facilities furnished pursuant to this Tariff, the responsibility of the Company shall be limited to the furnishing of facilities offered under this Tariff and to the maintenance and operation of such facilities; subject to this responsibility, the Company shall not be responsible for:

1. the transmission of signals by Customer-provided equipment or for the quality of, or defects in, such transmission of; or

2. the reception of signals by Customer-provided equipment.



France Telecom Corporate Solutions L.L.C. AR I?s.C. Tariff No. 1 *mal Page No. 16

’ - 7 ~ ; t \ : : ? l i L - J J

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D) ..-.

2.1 USE OF FACILITIES AND SERVICE (CONT’D) ,i


1. Company is solely responsible for operating Company-provided equipment. In the event that Customer attempts to operate any Company- provided equipment without first obtaining Company’s written approval, in addition to any other remedies of Company for a breach by Customer of Customer’s obligations hereunder, Customer shall pay Company for any damage to Company-provided equipment caused or related to Customer’s improper operation of Company-provided equipment upon receipt by Customer of a Company invoice therefor. In no event shall Company be liable to Customer or any other person for interruption of the Service or for any other loss, cost or damage caused or related to Customer’s improper use of Company-provided equipment.

j. Customer agrees to allow Company to remove all Company-provided equipment from Customer’s premises:

1. upon termination, interruption or suspension of the Service in connection with which the equipment was used; and

2. for repair, replacement or otherwise as Company may determine is necessary or desirable.

At the time of such removal, such equipment shall be in the same condition as when delivered to Customer or installed on Customer’s premises, normal wear and tear only excepted. Customer shall reimburse Company for the unamortized cost of any such equipment in the event the foregoing conditions are not met.



France Telecom Corporate Solutions L.L.C. AR P.S:C. Tariff No. 1

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D)

2.1 USE OF FACILITIES AND SERVICE (CONT’D) L . “ 4


k. The Customer, Authorized User, or joint user is responsible for ensuring that Customer-provided equipment connected to Company equipment and facilities is compatible with such Company equipment and facilities. The magnitude and character of the voltages and currents impressed on Company-provided equipment and wiring by the connection, operation, or maintenance of such equipment and wiring shall be such as not to cause damage to the Company provided equipment and wiring or injury to the Company’s employees or to other persons. In advance, Customer will submit to Company a complete manufacturer’s specification sheet for each item of equipment that is not provided by the Company and which shall be attached to the Company’s facilities. The Company shall approve the use of such item(s) of equipment unless such item is technically compatible with Company’s facilities. Any additional protective equipment required to prevent such damage or injury shall be provided by the Company at the Customer’s expense.

1. Any special interface equipment necessary to achieve compatibility between the facilities and equipment of the Company used for furnishing Service, and the channels, facilities, or equipment of others shall be provided at the Customer’s expense.

2.1.4 Assignment or Transfer

a. All service provided under this Tariff is directly or indirectly controlled by FTCS and neither the Customer nor its Authorized Users may transfer or assign the use of service without the express prior written consent of FTCS. Such transfer or assignment shall only apply where there is no interruption of the use or location of service. All terms and conditions contained in this Tariff shall apply to all such permitted transferees or assignees.



P I I

France Telecom Corporate Solutions L.L.C. AR P.S.C. Tariff No. 1 t ,I . 1 \ PriNnq’Qage No. 18 L-. ’ -

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D) % I -

i , * _ i l J 2.2 MINIMUM PERIOD OF SERVICE

The minimum period of service is one month except as otherwise provided in this Tariff. The Customer must pay the regular tariffed rate for the service they subscribe to for the minimum period of service. If a customer disconnects service before the end of the minimum service period, that Customer is responsible for paying the regular rates for the remainder of the minimum service period. When the service is moved within the same building, to another building on the same premises, or to a different premises entirely, the period of service at each location is accumulated to calculate if the Customer has met the minimum period of service obligation.

If service is terminated before the end of the minimum period of service as a result of condemnation of property, damage to property requiring the premises to be abandoned, or by the death of the customer, the Customer is not obligated to pay for service for the remainder of the minimum period.

If service is switched over to a new Customer at the same premises after the first month’s service, the minimum period of service requirements are assigned to the new Customer if the new Customer agrees in writing to accept them. For facilities not taken over by the new Customer, the original customer is responsible for the remaining payment for the minimum service period in accordance with the terms under which the service was originally furni shed.

2.3 PAYMENT FOR SERVICE RENDERED

2.3.1 Application for Service

a. Customers desiring to obtain Service must complete service application forms provided by Company. Company may require Customers or potential customers to provide information pertaining to their ability to pay for Service. Company may deny Service to Customers or potential customers which do not provide the requested infomation or who fail to meet Company’s financial criteria. Only Customers which have subscribed to Company’s interstate and international services pursuant to an agreement with the Company are eligible to apply for the service offerings contained in this Tariff.


Issued by: Jean-Sebastien Falisse, Treasurer France Telecom Corporate Solutions L.L.C. 2300 Corporate Park Drive, Mailstop SP0606 Herndon, VA 201 71

France Telecom Corporate Solutions L.L.C. AR P.S.C. %riff No. 1 ~ 1 . ~ qr@inMP@No. 19 ,,t .~ ” . -.. nbi

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D)

2.3 PAYMENT FOR SERVICE RENDERED (CONT’D) 3. . Y

2.3.1 Application for Service (Cont’d)

b. Cancellation of Application for Service:

Where installation of Service has been started prior to the cancellation of an application for Service, a cancellation charge equal to the costs incurred by the Company may apply.

C. Cancellation of Service:

The Customer may have service discontinued upon thirty (30) days written notice to the Company. The Company shall hold the Customer responsible for payment of all bills for service furnished until the cancellation date specified by the Customer or until the date that the written cancellation notice is received, whichever is later. Upon early cancellation of a term agreement, the Customer agrees to pay Company for the balance due under the contract for the entire term of the agreement. If Service was discontinued for non-payment of charges, Company may request additional information from the Customer and reserves the right to collect an advance payment and/or deposit prior to re-establishing Service. Unless the Customer notifies Company at least thirty (30) days prior to

the end of the initial term of the agreement, the agreement shall be automatically extended for a term equivalent to the initial term.

d. Applicants for Residential Service provided by Company must be given information on the Universal Lifeline program and its availability. Residential Service is not offered by Company at this time.

2.3.2 Deposits

a. Company does not collect Deposits or advanced payments from Customers at this time.



France Telecom Corporate Solutions L.L.C. ARp.’S.C. TariffNo. 1 ~f \‘I 2“ ri@al Page No. 20

i - u ”

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D) i

2.3 PAYMENT FOR SERVICE RENDERED (CONT’D) c d Y f

2.3.3 Payment of Charges

a. The Company shall bill on a current basis all charges incurred by and credits due to the Customer. The Customer may receive its bill in: (1) a paper format, or (2) via electronic transmission. Such bills are due upon receipt regardless of the media utilized. The Company shall bill in advance charges for all services to be provided during the ensuing billing period except for charges associated with service usage. Adjustments for the quantities of Service established or discontinued in any billing period beyond the minimum period will be prorated to the number of days based on a 30-day month. The Company will, upon request and if available, furnish such detailed information as may reasonably be required for verification of the bill.

b. The Company shall bill for all Services rendered within 90 days of the billing date.

c. All bills for Service provided to the Customer by the Company are due 15 days from the bill date. If any portion of the payment is received by the Company after the payment due date as set forth above, or if any portion of the payment is received by the Company in funds which are not immediately available to the Company, then a late payment penalty shall be due to the Company. The late payment penalty shall be a portion of the payment not received by the payment due date times a late factor. The late factor shall be 1.5% per month or 18% annually, or the highest rate allowed by law, whichever is the lesser. The late factor will be applied for the number of days from the payment due date to and including the date that the Customer actually makes the payment to the Company.



France Telecom Corporate Solutions L.L.C. P.S.C;-$&ff No. 1

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D) . - * .mi * _.I

2.3 PAYMENT FOR SERVICE RENDERED (CONT’D) #. .d

2.3.3 Payment of Charges (Cont’d)

d. Customer shall be responsible for payment of all sales, use, gross receipts, excise, access, bypass or other local, state and Federal taxes, charges or surcharges, however designated, imposed on or based upon the provision, sale or use of the services rendered by Company. Such taxes and surcharges shall be separately stated on the Customer’s bill.

e. When a check which has been presented to Company by a Customer in payment for charges is returned by the bank, the Customer shall be responsible for the payment of a Returned Check Charge of $20.

2.3.4 Non-Recurring Charges

a. Non-recurring charges are payable when the service for which they are specified has been ordered. If an entity other than FTCS (e.g., another carrier or supplier) imposes or will impose charges on FTCS in connection with an ordered service, those costs will also be charged to the Customer.

2.3.5 Customer Overpayments

Company will provide interest on customer overpayments that are not refunded within 30 days of the date Company receives the overpayment. An overpayment is considered to have occurred when payment in excess of the correct charges for service is made because of erroneous Company billing. The customer will be issued reimbursement for the overpayment, plus interest, or, if agreed to by the customer, credit for the amount will be provided on the next regular Company bill. The rate of interest shall be the Company’s applicable late payment penalty.



h.1..

C I

France Telecom Corporate Solutions L.L.C. AR P.S.?’rariff No. 1 I , 1 -ir \ ’1 G&@#alDge No. 22 k-* c 1 1 i.

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D) e-

2.3 PAYMENT FOR SERVICE RENDERED (CONT’D) . . + ..I

2.3.5 Customer Overpayments (Cont’d)

Interest shall be paid from the date when overpayment was made, adjusted for any changes in the deposit rate or late payment rate, and compounded monthly, until the date when the overpayment is refunded. The date when overpayment is considered to have been made will be the date on which the customer’s overpayment was originally recorded to the customer’s account by Company.

2.3.6 Disputed Bills

In the event that a billing dispute occurs concerning any charges billed to the Customer by the Company, the Customer must submit a written documented claim for the disputed amount. The Customer must submit all documentation as may reasonably be required to support the claim. All claims must be submitted to the Company within 90 days of receipt of billing for those services. If the Customer does not submit a claim as stated above, the Customer waives all rights to filing a claim thereafter.

Unless disputed, the invoice shall be deemed to be correct and payable in full by Customer. If the Customer is unable to resolve any dispute with the Company, then Customer may file a complaint with the Arkansas Public Service Commission, 1000 Center Street, Little Rock, AR 72201, Tel: 800-482-1 164.

If the dispute is resolved in favor of the Customer, no interest credits or penalties will apply.



France Telecom Corporate Solutions L.L.C. AR P.S.?'Tariff No. 1 j '1 Qr;i@dwge No. 23 - *

-L , 3 . i i L- 1

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT'D) i

" ,I 2.4 OBLIGATIONS OF THE CUSTOMER

2.4.1 The Customer shall be responsible for:

a. The payment of all applicable charges as set forth in this Tariff.

b. Damage or loss of the Company's facilities or equipment caused by the acts or omissions of the Customer, authorized user, or joint user or the non-compliance by the Customer, authorized user, or joint user with these regulations; or by fire or theft or other casualty on the premises of the Customer, authorized user, or joint user unless caused by the gross negligence or willful misconduct of the employees or agents of the Company .

c. Providing as specified from time to time by the Company any needed personnel, equipment, space and power to operate Company facilities and equipment installed on the premises of the Customer, authorized user, or joint user and the level of power, heating and air conditioning necessary to maintain the proper environment on such premises.

d. Obtaining, maintaining, and otherwise having full responsibility for rights-of-way and conduit necessary for installation of Fiber Optic Cable and associated equipment to provide Service to the Customer, authorized user or joint user from the cable building entrance or the property line of the land on which the structure wherein any termination point or origination point used by the Customer, authorized user or joint user is placed or located, whichever is applicable, through the point of entry into the structure, throughout the structure, to the location of the equipment space. Any and all costs associated with the obtaining and maintaining of the rights of way described herein, including the costs of altering the structure to permit installation of the Company-provided facilities, shall be bome entirely by, or may be charged by the Company to the Customer. The Company may require the Customer to demonstrate its compliance

with this section prior to accepting an order for Service.




SECTION 2 - GENERAL RULES AND REGULATIONS (CONTID) 1

, , A . * d

2.4 OBLIGATIONS OF THE CUSTOMER (CONT’D)

2.4.1 The Customer shall be responsible for: (Cont’d)

e. Providing a safe place to work and complying with all laws and regulations regarding the working conditions on the premises at which Company employees and agents shall be installing or maintaining the Company’s facilities and equipment. The Customer may be required to install and maintain Company facilities and equipment within a hazardous area if, in the Company’s opinion, injury to Company employees or property might result from installation or maintenance by the Company.

f. Complying with all laws and regulations applicable to, and obtaining all consents, approvals, licenses and permits as may be required with respect to, the location of Company facilities and equipment in any Customer Premises or the rights-of-way for which the Customer is responsible and obtaining permission for Company agents or employees to enter the premises of the Customer, authorized user, or joint user at any reasonable hour for the purpose of installing, inspecting, repairing, or upon termination of Service as stated herein, removing the facilities or equipment of the Company.

g. Making Company facilities and equipment available periodically for maintenance purposes at a time agreeable to both the Company and the Customer. No allowance will be made for the period during which Service is interrupted for such purposes.

h. Keeping the Company’s equipment and facilities located on the Customer’s premises of rights-of-way obtained by the Customer free and clear of any liens or encumbrances relating to the Customer’s use of the Company’s services or from the locations of such equipment and facilities.




SECTION 2 - GENERAL RULES AND REGULATIONS (CONT'D) - I

d 2.4 OBLIGATIONS OF THE CUSTOMER (CONT'D)

2.4.1 The Customer shall be responsible for: (Cont'd)

i. Customer Terminal Equipment on the premises of the Customer, authorized user, or joint user, the operating personnel there, and the electric power consumed by such equipment shall be provided by and maintained at the expense of the Customer, authorized user, or joint user. Conformance of Customer provided station equipment with Part 68 of

the FCC Rules is the responsibility of the Customer.

j - The Customer, authorized user, or joint user is responsible for ensuring that Customer-provided equipment connected to Company equipment and facilities is compatible with such equipment and facilities. The magnitude and character of the voltages and currents impressed on Company-provided equipment and wiring by the connection, operation, or maintenance of such equipment and wiring shall be such as not to cause damage to the Company-provided equipment and wiring or injury to the Company's employees or other persons.

Issued: 2003 Effective: ,2003

Issued by: Jean-Sebastien Falisse, Treasurer France Telecom Corporate Solutions L.L.C. 2300 Corporate Park Drive, Mailstop SP0606 Hemdon, VA 201 71

$9 c q ‘ ’7 3 ! J d h !i\ Li3 AR P.S.C. Tariff No. 1

Original Page No. 26

: -”.? France Telecom Corporate Solutions L.L.C. ;;u - %

Section 2 - GENERAL RULES AND REGWLATIM (CONT’D)

2.5 MAINTENANCE AND TESTING

Upon suitable notice, the Company may make such tests, adjustments and inspections as may be necessary to maintain the Company’s facilities in satisfactory operating condition. No interruption allowance will be credited to the Customer for the period during which the Company makes such tests, adjustments, or inspections.

Upon suitable notification to the Customer, and at a reasonable time, the Company may make such tests and inspections as may be necessary to determine that the Customer, authorized user, or joint user is complying with the requirements set forth above for the installation, operation and maintenance of Customer-provided facilities, equipment, and wiring in the connection of Customer-provided facilities and equipment to Company-owned facilities and equipment. If the protective requirements for Customer-provided equipment are not being complied with, the Company may take such action as it deems necessary to protect its facilities, equipment, and personnel. The Company will noti@ the Customer promptly if there is any need for further corrective action. Within ten (1 0) days of receiving this notice, the Customer must take such action. If the Customer fails to do this, the Company may take whatever additional action is deemed necessary, including the suspension of Service, to protect its facilities, equipment, and personnel from harm.

2.6 DISCONTINUANCE BY THE COMPANY

2.6.1 The Company, by ten (10) days written notice to the Customer and in accordance with applicable law, may discontinue Service or cancel an application for Service without incurring any liability when there is an unpaid balance for Service that is overdue and not disputed.



A t i +

-‘P

AR P.S”.*C: Tariff No. 1 i - France Telecom Corporate Solutions L.L.C.

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D) . -z .

2.6 DISCONTINUANCE BY THE COMPANY (CONT’D) , : , - -

2.6.2

2.6.3

2.6.4

2.6.5

2.6.6

2.6.7

The Customer whose check or draft is returned unpaid for any reason, after two attempts at collection, shall be subject to discontinuance of Service in the same manner as provided for nonpayment of overdue charges.

The Customer shall be subject to discontinuance of Service, without notice, for any violation of any law, rule, regulation or policy of any government authority having jurisdiction over Service, or by reason of any order or decision of a court or other government authority having jurisdiction which prohibits the Company from furnishing such Service, or for any violation of any of the provisions governing the furnishing of Service under this Tariff.

The Company may immediately discontinue service to any Customer, without notice, in order to protect against fraud or to otherwise protect Company personnel, agents, facilities, or services.

The Customer shall be subject to discontinuance of Service, without notice, for the Company to comply with any order or request of any governmental authority having jurisdiction.

If any Customer files for bankruptcy or reorganization or fails to discharge an involuntary petition therefor within the time permitted by law, the Company may immediately discontinue or suspend Service under this Tariff without incurring any liability.

Upon the Company’s discontinuance of Services to the Customer, the Company, in addition to all other remedies that may be available to the Company at law or in equity or under any other provision of this Tariff, may declare all future monthly and other charges which would have been payable by the Customer under this Tariff during the remainder of the minimum term for which such Services would have otherwise been provided to the Customer to be immediately due and payable.




SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D) . * -

u ! _ i 0 .d 2.6 DISCONTINUANCE BY THE COMPANY (CONT’D)

2.6.8 If Service has been discontinued for nonpayment or as otherwise provided herein and the Customer wishes it continued, Service shall, at the Company’s discretion, be restored when all past due amounts are paid or the event giving rise to the discontinuance (if other than nonpayment) is corrected. Non-recurring charges apply to restored Services.

2.6.9 Any notice the Company may give to a Customer shall be deemed properly given when delivered, if delivered in person, or when deposited with the U.S. Postal Service, addressed to the Customer’s billing address or to such address as may be subsequently given by Customer to the Company.

2.6.10 Except for cancellation of Service or as otherwise provided by these rules, any notice from any Customer may be given by the Customer or any authorized representative to the Company’s business office orally or by written notice mailed to the Company’s business address. Cancellation of Service must be by written notice.

2.7 RESTORATION OF SERVICE

2.7.1 If service has been discontinued for nonpayment or as otherwise provided herein and the Customer wishes it continued, service shall, at FTCS’s discretion, be restored when all past due amounts are paid or the event giving rise to the discontinuance (if other than nonpayment) is corrected.

2.8 ALLOWANCES FOR INTERRUPTIONS IN SERVICE

2.8.1 Credit allowances for interruptions of service which are not due to FTCS’s inspection or testing, to the negligence of the Customer, or the failure of channels, equipment and/or communications systems provided by the Customer, are subject to the general liability provisions set forth in this Tariff.



France Telecom Corporate Solutions L.L.C. AR P.S.C. Tariff No. 1 113 22 l?\&inal Page No. 29

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;-,c 3 SECTION 2 - GENERAL RULES AND REGULATIONS (CONT’D)

-3 , *

2.8 ALLOWANCES FOR INTERRUPTIONS IN SERVICE (CONT3

2.8.2

2.8.3

2.8.4

It shall be the obligation of the Customer to notify FTCS immediately of any interruption in service for which the Customer desires a credit allowance. Before giving such notice, the Customer shall ascertain that the trouble is not within his or her control, or is not in wiring or equipment, if any, furnished by Customer.

For purposes of credit computation, every month shall be considered to have 30 days. The Customer shall be credited for an interruption of one day (24 hours) or more at the rate of 1/30th of the monthly charge for the services affected for each day that the interruption continues.

Credit Formula:

Credit = A/30 x B

A = outage time in days

B = total monthly charge for affected service

No credit allowances shall be made for:

a. Interruptions that are caused by the negligence of the Customer or others authorized by the Customer to use the Customer’s service;

b. Interruptions that are due to the failure of power, equipment, systems, or services not provided by FTCS;

c. Interruptions during any period during which FTCS or its agents are not afforded access to the premises where Access Lines associated with the Customer’s service are located;

d. Interruptions during any period when the Customer or user has released the service to FTCS for maintenance, rearrangement, or the implementation of a Customer order;



.- Ai:!:

France Telecom Corporate Solutions L.L.C. '-'" P.S.C. T&ff No. 1

SECTION 2 - GENERAL RULES AND REGULATIONS (CONT'D) ... * , r - , -

2.8 ALLOWANCES FOR INTERRUPTIONS IN SERVICE (CONT'D) I 3

2.8.4 No credit allowances shall be made for: (Cont'd)

e. Interruptions during any period when the Customer or user has refused to release the service for testing or repair;

f. Interruptions during any period when the non-completion of calls is due to network busy conditions; or

g. Interruptions not promptly reported to the FTCS.

Issued: ,2003


Effective: ,2003


SECTION 3 - CONNECTION CHARGES Lr --- , *

I I I. -. b J

[Reserved for Future Use]



France Telecom Corporate Solutions L.L.C. * * *

, - AR P.S.(?Tariff No. 1

SECTION 4 - SERVICES AND RATE STRUCTURE _ * -a

. ! 4, J 4.1 SERVICE OFFERINGS

4.1.1 Local Exchange Service

a. Nature of Service

Local Exchange Service is a telephone service that allows customers to originate non-toll local calls at locations within the service areas in which the Company has been approved for certification and terminate calls within the local calling area and EAS area of those locations, and within the LATA in which the call originates.

Touch Tone service provides for the origination of calls by means of instrumentalities equipped for tone-type signaling.

Service connection charges are nonrecurring charges which apply for the connection, move or change of local telephone service. One or more Service Connection Charges may apply to each Customer order depending upon the work functions performed. All changes in the location of customer’s service from one premises to another are treated as new service establishment with Service Connection Charges applying. Service Connection Charges are associated with, but not necessarily limited to:

1. Installation of Service - Applies for establishing each initial or additional line or trunk. The charge includes initial ordering, central office work and exchange access line work.

2. Primary Interexchange Carrier (PIC) Change Charge - This refers to an arrangement whereby a customer may select and designate an Interexchange Carrier to access, without an access code, for interLATA and intraLATA calls. Single line customers requesting a PIC to only one line will incur the per line charge. Multi-line customers requesting a PIC to more than one line in a single request will incur the per line charge for the first line and the additional line charge for each additional line.




SECTION 4 - SERVICES AND RATE STRUCTURE (CONT’D)

4.1 SERVICE OFFERINGS (CONT’D) I ) ’ * * , -3 Li.,

4.1.1 Local Exchange Service (Cont’d)

a. Nature of Service (Cont’d)

3. Record Change - This refers to the changing of billing name responsibility subsequent to the initial installation of service.

4. Trouble Isolation - Applies for each repair visit made to a customer premise to test the central office line, up to the demarcation point, when the line test clear and the trouble is not found in the exchange providers facilities.

b. Recurring Rates

Local Access Line

C. Non-recurring Charge

Installation

PIC change charge-InterLATA

PIC change charge-IntraLATA

Record Change

Trouble Isolation

$66 per month

$1 12

$10

$10

$17

$140



t > .

I 1 A F s 11.

1

AR!k3.C. Tariff No. 1 22 i p n w a l Page No. 34

-r France Telecom Corporate Solutions L.L.C.

KEr, ’3 ‘J


4.1 SERVICE OFFERINGS (CONT’D)

4.1.2 Virtual Private Network Service

The Virtual Private Network (“VPN”) service provides the Customer the functionality and capabilities of a private network through the use of shared and/or dedicated transmission facilities. This service permits the Customer to establish a communications path between two Customer locations.

a. On Net - On Net

The following features are available:

1. Private numbering plan;

2. Call Line Identification (“CLID”), in order to get the appearance of an alphanumeric message including name of the calling Customer site and the last digits of the caller’s extension;

3. User access code, in order to identify, monitor and authorize the use of tolled services;

4. Intrastate toll free and toll shared services, for inbound communications to Customer call centers; and

5 . Call rerouting to an alternate Customer site.



AR P.S.C. ?&iff No. 1 No. 35

.; F I‘*


UEC 3 Ptp~t%Tam SECTION 4 - SERVICES AND RATE STRUCTURE (CONT’D)


4.1.2 Virtual Private Network Service (Cont’d)

b. Virtual On Net

The following features are available:

1. Private numbering plan;

2. Call Line Identification (“CLID”), in order to get the appearance of an alphanumeric message including name of the calling Customer site and the last digits of the caller’s extension;

3. User access code, in order to identify, monitor and authorize the use of tolled services;

4. Intrastate toll free and toll shared services, for inbound communications to Customer call centers;

5. Call rerouting to an alternate Customer site;

6. On Net - Off Net;

7 . Off Net - On Net; and

8. Off Net - Off Net.




On-Net - On-Net Virtual On Net On Net - Off Net Off Net - On Net Off Net - Off Net


$0.04 $0.04 $0.04 $0.04 $0.10 $0.10 $0.10 $0.10 $0.15 $0.15


Remote Access Personal Codes (per account) Remote Access per 8XX

4.1.2 Virtual Private Network Service (Cont’d)

$0.50 per call $40 per month $2 per month

c. Recurring Charges

access) Switched overflow

The following per minute rates apply to all VPN switched and dedicated calls as specified below:

$50

1 Service I InterLATA 1 TntraLATA

d. Non-recurring Charges

I U D Charge I $1 0.000 1 Switched Access Line Group charge (applies to I $100 per location I I each Company VPN location with switched I




Ai;& t

p.” I ’ AR P.S.C.’khff No. 1

SECTION 4 - SERVICES AND RATE STRUCTURE (CONT’D) ” -7

* - I . 1 4.1 SERVICE OFFERINGS (CONT’D) , 1 ”.A. L

4.1.3 Local Dedicated Service


Local Dedicated Service provides a digital exchange service for PBX customers. Dedicated service includes a dedicated line facility, common equipment, local exchange switching for access to the local exchange and toll networks. Each dedicated line facility utilizes channels which may be configured as either basic or advanced trunks, as defined, or a combination of both types of trunks. Rates and charges include touch-tone. The rates depicted below are for month to month or a one (1) year term as well as thirty-six (36) month or sixty (60) month terms.

b. Recurring and Non-recurring Charges

1. DS-1 Rate Elements (per circuit, per customer premises)

Monthly Rate Nonrecurring Rate

a. Channel Termination

Month-to-Month 36 Months 60 Months

$191 .OO $230.00 153.00 130.00 134.00 0.00

b. Interoffice Mileage

1. Mileage, per Circuit Fixed

Month-to-Month 62.30 36 Months 49.80 60 Months 43.60

2. Per Mile Month-to-Month 36 Months 60 Months

18.70 14.90 13.10

Issued: , 2003 Effective: , 2003


France Telecom Corporate Solutions L.L.C. - r *

AR P.S.C. <%ff No. 1

UEC

SECTION 4 - SERVICES AND RATE STRUCTURE (CONT'D) c t ' i"& 1 q - Lk

1 1 I " " 4.1 SERVICE OFFERINGS (CONT'D)

4.1.3 Local Dedicated Service (Cont'd)

b. Recurring and Non-recurring Charges (Cont'd)

1. DS-1 Rate Elements (per circuit, per customer premises) (Cont'd)

c. Extended Transport Month-to-Month 53.00 120.00 36 Months 53.00 120.00 60 Months 53.00 120.00

d. Extended Mileage Month-to-Month 15.90 36 Months 15.90 60 Months 15.90

2. DS3 Rate Elements (per circuit, per customer premises)

a. Channel Termination Month-to-Month $1960.00 $230.00 36 Months 1770.00 130.00 60 Months 1280.00 0.00

b. Interoffice Mileage 1. Mileage, per Circuit

Fixed Month-to-Month 36 Months 60 Months

2. Per Mile Month-to-Month 36 Months 60 Months

843.00 759.00 548.00

124.00 112.00 80.80






4.1.3 Local Dedicated Service (Cont’d)

b. Recurring and Non-recurring Charges (Cont’d)

2. DS3 Rate Elements (per circuit, per customer premises) (Cont’d)

c. Extended Transport


d. Extended Mileage


7 17.00 120.00 717.00 120.00 717.00 120.00

105.00 105.00 105.00



France Telecom Corporate Solutions L.L.C. A R k r

q7Gr AR P.S.C. &giff No. 1

SECTION 4 - SERVICES AND RATE STRUCTURE (CONT’D) . X I ”? 1: : ,.- 4.1 SERVICE OFFERINGS (CONT’D) _, 4 -.

4.1.4 Integrated Services Digital Network-Primary Rate Interface (ISDN-PRI)


ISDN-PRI is a high speed end-to-end digital switched service that provides PBX and host computers access to switched services via an ISDN central office. The service can carry voice, data and video simultaneously. Traffic can be inward, outward or a combination of both. This is controlled by the Customer’s CPE.

A standard service consists of up to twenty-three “B” bearer channels and one “D” delta channel at a total speed of 1.544 Mbps. The D channel is used for signaling and control the B channels. A D channel can be shared by multiple PRI services. The local channel may be a DS 1 with clear channel capability.

1. PRI Local Channel

a. Provides a digital multi-channel transmission path between the central office and the customer’s premises. The PRI Local Channel can be provisioned on a DS-3. The following options are available for PRI Local Channel:

(1) A DS-1 connection between the central office and the Customer’s premises; and

(2) PRI Local Channel Advanced-T3L: A DS-1 connection between the central office and the customer’s ’remises which is provisioned on a DS-3.



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France Telecom Corporate Solutions L.L.C. nPr ’ d‘$.S.C. Tariff No. 1

SECTION 4 - SERVICES AND RATE STRUCTURE (CONT’D) ?“ i 7 * ’,? :. P &&’ ..I


4.1.4 Integrated Services Digital Network-Primary Rate Interface (ISDN-PRI) (Cont’d)

a. Nature of Service (Cont’d)

1. PRI Local Channel (Cont’d)

b. PRI Local Channel Termination

Provides Multiplexing to support up to 23 PRI B Channels at 64 Kbps and one PFU D Channel for signaling at 64 Kbps. One PRI Local Channel Term is required per PRI Local Channel. There is an optional PRI Local Channel Termination that has 23 PRI B Channels and one PRI Back Up D Channel.

c. ISDN-PRI Optional Service Components/Features

1. PRI Local Access Call by Call-This PRI Local Access option configures the B channels to support in-only and out only call flexibility predetermined by the customer’s traffic flow.

2. PRl Local Access DD-This PRI Local Access option configures the B channels to support inward only traffic. Monthly recurring and non-recurring DID number charges per this Tariff, will apply additionally.

3. PRI Local Access Outward-This PRI Local Access option configures the B channels to support outward only traffic.

4. PRI Local Access DID 2 Way-This PRI Local Access option configures the B channels to support 2 way traffic. Monthly recurring and non-recurring DID number charges per this Tariff, will apply additionally.



'6 u . 5.r.:" . AR P.S.C. Tariff No. 1 I. France Telecom Corporate Solutions L.L.C.

SECTION 4 - SERVICES AND RATE STRUCTURE (CONT'D) r, ".*% qJ

_ j "4 4.1 SERVICE OFFERINGS (CONT'D)

4,1.4 Integrated Services Digital Network-Primary Rate Interface (ISDN-PRI) (Cont'd)

a. Nature of Service (Cont'd)

1. PRI Local Channel (Cont'd)

c. ISDN-PRI Optional Service ComponentsiFeatures (Cont'd)

5. PRI Local Data Channel 23B-This PRI Local Access option configures 23B channels on the T-1 facility for 2 way data and video traffic only.

6. PRI Local Data Channel 24B-This PRI Local Access option configures 24 B channels on the T-1 facility for 2-way data and video traffic only.

7. PRI Local Data Channel-24B-This PRI Local Access option configures 24B channels on the T-1 facility for 2 way data and video traffic only.

8. PFU Local Channel Termination-This PRI Local Channel Terminations options provides 23 B channels and a D channel.

9. PRI Local Channel Termination 24B-This PRI Local Channel Terminations option provides 24 B channels.

10. PRI Local Channel Termination 23 B+D-This PRI Local Channel Terminations option provides 23 B channels and a Back Up D channel.




Service PRI Local Channel PRI Local Channel Advanced-

I - . . < .

AR P.S.C. Tariff No. 1 t;C F J :*3.@

Non-recurring Charges Monthly Recurring Charges $1,800 $300 $1,800 N/C

SECTION 4 - SERVICES AND RATE STRUCTURE (CONT’D) . * I

T3 PRI Local Channel

* .( ” I* I ... L m.


4.1.4 Integrated Services Digital Network-Primary Rate Interface (ISDN-PRI) (Cont’d)

b. Recurring & Non-recurring Charges

$2,050 $800 Termination Pri Local Access Call-By-Call PRI Local Access DID PFU Local Access Outward PRI Local Access DID 2-Wav

$200 $150 $200 $150 $80 $60 $200 $150

PRI Local Data Channel-23B PRI Local Data Channel-24B PRI Local Channel Termination-24B

$2,550 $1,200 $2,700 $1,200 $2,050 $800

PRI Local Channel Termination-24B + D PRI Local Channel Termination wmackup D PRI Service Change, Per Facility

I $800 $2,050 $800

$100 N/C




SECTION 5 - SUPPLEMENTAL SERVICES

. i - * r i





SECTION 6 - RESIDENTIAL NETWORK SWITCHED SERVICES' ' " . *.., r d




_..- . .. (. , . ./. . ..

France Telecom Corporate Solutions L.L.C. tt‘,c ‘ 3 ; w d k z k a r i f f No. 1 Original Page No. 46

SECTION 7 - SPECIAL SERVICES AND P R O G W S . - 2 -

7.1 SCHOOLS AND LIBRARIES DISCOUNT PROGRAM

7.1.1 General

The Schools and Libraries Discount Program permits eligible schools (public and private, grades Kindergarten through 12) and libraries to purchase the Company services offered in this Tariff at a discounted rate, in accordance with the Rules adopted by the FCC in its Universal Service Order 97-157, issued May 8, 1997. The Rules are codified at 47 Code of Federal Regulation (C.F.R.) 54.500 et. seq.

As indicated in the Rules, the discounts will be between 20 and 90 percent of the pre-discount price, which is the price of services to schools and libraries prior to application of a discount. The level of discount will be based on an eligible school’s or library’s level of economic disadvantage and by its location in either an urban or rural area. A school’s level of economic disadvantage will be determined by the percentage of its students eligible for participation in the national school lunch program, and a library’s level of economic disadvantage will be calculated on the basis of school lunch eligibility in the public school district in which the library is located. A non-public school may use either eligibility for the national school lunch program or other federally approved alternative measures to determine its level of economic disadvantage. To be eligible for the discount, schools and libraries will be required to comply with the terms and conditions set forth in the Rules. Discounts are available only to the extent that they are funded by the federal universal service fund. Schools and libraries may aggregate demand with other eligible entities to create a consortium.



France Telecom Corporate Solutions L.L.C. , L . + w g * T 9 q f q g 1 OGginal Page No. 47

SECTION 7 - SPECIAL SERVICES AND PROGRAMS (CONT'D) . * A . "4. *s 7.1 SCHOOLS AND LIBRARIES DISCOUNT PROGRAM (CONT'D)

7.1.2 Regulations

a. Obligation of eligible schools and libraries

1. Requests for service

a. Schools and libraries and consortia shall participate in a competitive bidding process for all services eligible for discounts, in accordance with any state and local procurement rules.

b. Schools and libraries and consortia shall submit requests for services to the Schools and Libraries Division, as designated by the FCC, and follow established procedures.

c. Services requested will be used for educational purposes.

d. Services will not be sold, resold or transferred in consideration for money or any other thing of value.

b. Obligations of the Company

1. The Company will offer discounts to eligible schools and libraries on commercially available telecommunications services contained in this Tariff. Those services contained in this Tariff which are excluded from the discount program, in accordance with the Rules, are included as an attachment to this Tariff.

2. The Company will offer services to eligible schools, libraries and consortia at prices no higher than the lowest price it charges to similarly situated non-residential customers for similar services (lowest corresponding price).




SECTION 7 - SPECIAL SERVICES AND PROGRAMS (CONT’D) * -

. ,*a 7.1 SCHOOLS AND LIBRARZES DISCOUNT PROGRAM (CONT’D) ’ ’

7.1.2 Regulations (Cont’d)

b. Obligations of the Company (Cont’d)

3. In competitive bidding situations, the Company may offer flexible pricing or rates other than in this Tariff, where specific flexible pricing arrangements are allowed, subject to Arkansas State Public Service Commission approval.

7.1.3 Discounted Rates for Schools and Libraries

a. Discounts for eligible schools and libraries and consortia shall be set as a percentage from the pre-discount price, which is the price of services to schools and libraries prior to application of a discount.

b. The discount rate will be applied to eligible intrastate services purchased by eligible schools, libraries or consortia.

c. The discount rate is based on each school’s or library’s level of economic disadvantage as determined in accordance with the FCC Order or other federally approved alternative measures (as permitted by the Rules) and by its location in either an urban or rural area.



France Telecom Corporate Solutions L.L.C. %P.Shf.,fgffNo. 1 h,-t ; 1 eNo. 49 I.-‘%

SECTION 7 - SPECIAL SERVICES AND PROGRAMS (CONT’P)

Services Ineligible for Schools and Libraries Discount . _ ” <.i

7.1.4


7.1.5 Schools and Libraries Discount Matrix

% DISCOUNT LEVEL

HOW DISADVANTAGED

% of students eligible for national school lunch program

<1 1-19

20-34 35-49 50-74

75-100

URBAN DISCOUNT

20 40 50 60 80 90

RURAL DISCOUNT

25 50 60 70 80 90




SECTION 8 - SPECIAL ARRANGEMENTS

8.1 CONTRACTS

At FTCS's option, service may be offered on an Individual Case Basis to meet specialized requirements of the Customer not contemplated in this Tariff. The terms of each contract shall be mutually agreed upon between the Customer and FTCS and may include discounts off of rates contained herein, waiver of recurring or nonrecurring charges, charges for specially designed and constructed services not contained in FTCS's general service offerings, or other customized features. The terms of the contract may be based partially or completely on the term and volume commitment, type of originating or terminating access, mixture of services or other distinguishing features. Service shall be available to all similarly situated Customers for a fixed period of time following the initial offering to the first contract Customer as specified in each individual contract.

8.2 PROMOTIONAL OFFERINGS

From time to time FTCS shall, at its option, promote subscription or stimulate network usage by offering to waive some or all of the nonrecurring or recurring charges for the Customer (if eligible) of target services for a limited duration. Such promotions shall be made available to all similarly situated Customers in the target market area(s).




SECTION 9 - LOCAL CALLING AREAS

9.1 SERVICE AREAS ~ * E d

Where suitable facilities permit, the services referred to in this Tariff will be provided by the Company within the local calling area of each exchange or zone defined in the tariff(s) of the incumbent local exchange carrier.




b.;;i;

f : ' AR P.S.C. T&&NO. 1

SECTION 10 - EXPLANATION OF TERMS 1 iY,

Certain terms used throughout this Tariff for telecommunications services. of the %pany are defined below.

Access Line: A communications path, provided by a person other than the Company, on the customer side of Demarcation Point, which connects a Demarcation Point to another point.

Advance Payment: Part or all of a payment required before the start of service to Customer.

Authorized User: A person, firm or corporation which is authorized by the Customer or joint user to be connected to the service of the Customer or joint user, respectively. An authorized user must be specifically named in the application for service.

Bit: The smallest unit of information in the binary system of notation.

BPS: Bits per second.

Call: Telephonic communication originated by a person or mechanical or electrical device from a number to another number that is answered by a person or mechanical or electrical device. The numbers may be located any distance apart within Arkansas. Communication may consist of voice, data, a combination of both, or other transmission, may be by wire or wireless medium and may be for any duration of time. An attempted or incomplete Call is an unsuccessful attempt by a Customer to place a Call.

Circuit: A communications path provided by Company between two or more Demarcation Points, at a transmission speed agreed to between Company and Customer.

Channel: A communications path between two or more points of termination. Such termination points may be located anywhere in Arkansas. Communication may consist of voice, data, a combination of both, or other transmission and may be by a wire or wireless medium. Channel capacity may be any size and is typically measured in bits per second, with 1.5 megabits per second equal to one voice channel. Duration is typically of unlimited duration.



Ri.1:. I


’ - SECTION 10 - EXPLANATION OF TERMS (CONT’D)

“ 3

1 , j Company: France Telecom Corporate Solutions L.L.C., the issuer of this Tariff-

Company Terminal Location: facilities.

Any Demarcation Point where the Company maintains its

Commission: Arkansas Public Service Commission, the regulatory agency within the State of Arkansas.

Customer: The person, firm or corporation which orders service and is responsible for the payment of charges, compliance with the terms and conditions of this Tariff, and compliance with the laws of the State of Arkansas.

Customer Premises: A location occupied by Customer, or which Customer has the right to occupy, for the purposes of transmitting or receiving communications signals, and which is made available to Company for the maintenance and operation thereon or therein of a Company Terminal Location.

Customer Terminal Equipment: Terminal equipment provided by the Customer.

Demarcation Point: The point of interconnection of an Access Line or other connecting communications path or equipment provided by Customer or any person to company-provided equipment.

Direct-Inward-Dialing (DID): Special trunking arrangement which permits incoming calls from the exchange network to reach a specific PBX station directly without an attendant’s assistance.

Facilities: Cables, wires, poles, conduits and other Company equipment that is used to provide service to Customers including wire center distribution frames and central office switching equipment.

Fiber Optic Cable: A thin filament of glass with a protective outer coating through which a light beam carrying communications signals may be transmitted by means of multiple internal reflections to a receiver, which translates the message.

FTCS: France Telecom Corporate Solutions L.L.C.



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